India keeps strategic reserves of crude oil, but not of cooking gas. With the Strait of Hormuz disrupted, the government invoked the Essential Commodities Act on March 9 to put household kitchens first in line.
India has spent two decades building underground caverns near Visakhapatnam, Mangaluru and Padur to store emergency crude oil. It never built an equivalent strategic reserve for liquefied petroleum gas, the fuel in more than 30 crore household cooking cylinders. Two weeks into the Gulf war, that gap became the most urgent problem in Indian energy policy.
Why LPG is more fragile than oil
India produces some LPG at its refineries but imports roughly 60% of what it uses, mostly from Qatar, the UAE, Saudi Arabia and Kuwait, and most of that cargo must pass through the Strait of Hormuz. LPG is harder and more expensive to store than crude, since it must be kept under pressure or chilled, so supplies in the system typically cover only a few weeks of demand. When ships stop arriving, there is very little cushion.
On March 9, the government invoked the Essential Commodities Act to control how scarce gas is distributed, putting household kitchens at the front of the queue and industrial and commercial users behind them. Oil companies limited bookings, lengthened the gap between refills and redirected cylinders to homes.
A reserve is boring until the week you need it, and then it is the only thing that matters.
Who absorbs the shortage
When a government protects households, someone else goes short. In this case it is restaurants, dhabas, hostels and small manufacturers that rely on commercial cylinders, many of which cut menus, raised prices or closed temporarily. A supply shock like this one is harder to fix with money than a price shock, because no amount of subsidy creates gas that is stuck on the wrong side of a strait. The debate that starts now is whether India should pay to build LPG storage it may not need for another decade, the same debate that, for crude oil, it settled twenty years ago.
Sources: Ministry of Petroleum and Natural Gas orders, March 2026; Observer Research Foundation analysis of LPG supply.
- India imports roughly 60% of the LPG it uses, much of it from Gulf producers.
- Unlike crude oil, there is no strategic reserve for LPG. The buffer is a few weeks.
- On March 9 the government invoked the Essential Commodities Act to ration gas, prioritising homes over industry.
- Restaurants, small factories and commercial users bear most of the shortage.
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