India Boosts Domestic LPG Output as Strait of Hormuz Disruption Raises Import Concerns

Indian refiners are increasing LPG production as the country faces a gap in supplies and renewed uncertainty over imports through the Strait of Hormuz, as per The Economic Times news report. 

Refiners are planning to add around 4,000 metric tonnes per day (MT/day) to current production of 37,000-38,000 MT/day. The increase would be more than 10% over present output. 

Import Supplies 

LPG imports fell 25% year-on-year to 1.45 million tonnes in August 2026, according to Vortexa shipping data. Supplies are still arriving through the Strait of Hormuz, although the route has become less dependable. 

Before the war, the Strait handled about 90% of India’s LPG imports. Around one-fifth of the world’s crude oil and gas supplies also moved through the waterway before the conflict began on February 28, 2026. 

Consumption Declines 

Lower domestic consumption has helped make up for part of the import shortfall. Data from the Ministry of Petroleum and Natural Gas showed LPG consumption fell 17% year-on-year in August 2026. 

The decline was seen among households, commercial users and industry. Bulk LPG consumption by industry fell around 80% in July 2026. 

Some industry executives attributed the lower industrial use to a shift towards piped natural gas, diesel and wood pellets. Others pointed to informal supply curbs and weaker demand. 

Earlier Increase in Output 

Domestic LPG production had reached 54,000 MT/day in May 2026, compared with around 36,000 MT/day before the war. Refiners increased output by reducing supplies to other product streams, including petrochemicals. 

Production was later reduced after shortages of plastics and other materials emerged. Output fell 19% month-on-month to 1.2 million tonnes in July 2026, the latest month for which data is available. Average production was around 50,000 MT/day in June 2026. 

Strait of Hormuz 

The US and Iran have stepped up attacks on each other’s ships in recent days. This has raised concerns over further disruption to shipping through the Strait. 

Current LPG stocks are described as comfortable, but a week-long disruption to the route could affect supplies. 

Read More: Defence Ministry Clears ₹1.1 Lakh Crore Military Acquisitions; 98% Sourcing from India! 

Conclusion 

India is raising LPG production as import volumes remain lower and shipping through the Strait of Hormuz faces renewed uncertainty. Lower consumption has also reduced demand for imported supplies. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.  

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.