India has capped commercial LPG supply at 20% to prevent hoarding and price hikes amid West Asia energy crisis.
The conflict has disrupted shipping through the Strait of Hormuz, affecting global fuel markets.
The government is prioritising household and essential services, while commercial sectors face cuts.
In a major decision, Centre has introduced a 20 per cent limit on the average monthly commercial LPG supply by oil marketing companies (OMC), in coordination with state governments, announced Union Petroleum and Natural Gas Minister Hardeep Singh Puri in the Parliament on March 12, 2026. Effective from this date, the restriction is aimed to prioritise domestic LPG consumption and ensure there is no hoarding or black marketing, he added.
This means OMCs will now be reducing their LPG allocation to commercial entities by 80 per cent compared to what they were required to supply in the previous months on an average.
The measure comes as India, like many other countries, grapples with the fallout from the escalating conflict involving Iran, Israel and the United States. This conflict has effectively disrupted commercial shipping through the Strait of Hormuz — a strategic chokepoint that carries about 20 per cent of the world’s crude oil, natural gas and LPG trade. With shipping through the route severely disrupted, the government has begun rationing some energy supplies while trying to shield households and essential sectors.
Across the country, the crisis is already visible in the LPG market. The price of a 14.2 kg domestic LPG cylinder was raised by Rs 60 earlier this month, while commercial cylinders used by hotels and restaurants rose by about Rs 114, the first increase in nearly a year, as global fuel markets reacted to the West Asia conflict, according to data from Indian Oil Corporation (IOC).
A 14.2 kg domestic non-subsidised LPG cylinder is now priced between Rs 913 and Rs 928.5, depending on the city, applicable since March 7, 2026, IOC shared.
The price shock and fears of supply disruption have triggered panic booking, hoarding and black-market activity in several cities, prompting the Centre to ask states to closely monitor LPG distribution and crack down on illegal stockpiling.
Authorities have also tightened consumption rules to conserve supplies. Domestic LPG deliveries remain available, but the minimum refill booking gap has been extended to 25 days to prevent panic buying and diversion.
Commercial LPG supply, meanwhile, has been curtailed, hitting restaurants, bakeries and catering businesses in several cities. Some establishments have reduced menus or temporarily shut operations due to the cooking gas shortage.
Transport and small businesses are also feeling the squeeze. In parts of southern India, thousands of autorickshaws running on auto-LPG and CNG have been forced off the roads due to fuel shortages. Meanwhile, railway kitchens and institutional canteens are exploring induction cooking and other alternatives.
To stabilise the market, the government has prioritised LPG supply for households and essential services such as hospitals and educational institutions. Refineries have been instructed to increase LPG production and divert additional output to cooking gas supply chains.
India consumes about 31.3 million tonnes of LPG annually, with 62 per cent of the requirement met through imports, many of which pass through the Strait of Hormuz, according to the Union Ministry of Petroleum and Natural Gas. This dependence makes the country particularly vulnerable to geopolitical disruptions in West Asia.
India’s first formal response to the energy shock came through India’s Natural Gas (Supply Regulation) Order, 2026, issued under the Essential Commodities Act on March 10. The order establishes a priority allocation system to manage gas shortages and ensure critical sectors continue receiving fuel.
Under the framework, piped natural gas (PNG) for households, compressed natural gas (CNG) for vehicles, and natural gas used for LPG production receive full supply, while several industrial sectors face reductions. Refineries and power plants will receive 80 per cent of their previous six-month average gas supply, petrochemical and fertiliser plants 70 per cent, and other industrial and commercial users 65 per cent.
This has raised concerns over food access in cities, particularly for India’s vast migrant workforce, reported Down To Earth. Many of the country’s roughly 100 million migrant workers rely on low-cost neighbourhood eateries and dhabas for their daily meals because they lack cooking facilities at home. Any disruption to fuel supplies for these establishments could push up meal prices or reduce food availability.
Street vendors and small food stalls that serve the cheapest meals — often operating on small LPG cylinders or informal gas connections — are among the most vulnerable. Many require frequent refills and operate on thin margins, meaning supply cuts could quickly translate into reduced operations.
The government said the curbs are necessary to stabilise the market amid rising panic buying and reports of hoarding and diversion. Authorities have also extended the minimum refill booking gap for domestic LPG cylinders to 25 days from 21 days and increased monitoring of distributors to curb black-market activity.
At the same time, the Centre has moved to diversify fuel supplies to offset disruptions from the Gulf. India previously sourced around 60 per cent of its LPG imports from Gulf producers, but additional cargoes are now being procured from countries including the United States, Norway, Canada, Algeria and Russia, minister Puri said.
Refineries have also been directed to maximise LPG production, increasing output by about 28 per cent in the past five days by diverting propane and butane streams to cooking gas supply chains, the minister informed.
Officials insisted that domestic LPG supply for more than 33 crore households remains fully protected. But with commercial fuel use curtailed and global energy flows disrupted, the knock-on effects of gas rationing are beginning to surface in India’s informal urban food economy, where millions depend on cheap cooked meals each day.