Impact of West Asian Tensions on India's LPG Supply
New Delhi's dependence on West Asian countries for liquefied petroleum gas (LPG) poses a significant vulnerability for Indian households amid regional tensions. Two-thirds of India's LPG consumption is sourced from West Asia, making it a politically sensitive issue.
Supply Challenges and Vulnerabilities
- Indian households are primarily affected if there are disruptions in LPG supplies due to geopolitical tensions.
- India's LPG consumption has more than doubled over the past decade, reaching 330 million households, increasing import dependence.
- Approximately 66% of LPG is imported, with 95% from West Asia, notably Saudi Arabia, the UAE, and Qatar.
Storage and Alternative Options
- India's LPG storage can cover only 16 days of national average consumption.
- Potential alternative sources include the US, Europe, Malaysia, and parts of Africa, although these options involve longer shipment times.
- With limited piped natural gas (PNG) availability, electric cooking remains the primary alternative.
Crude Oil Resilience
- India is better positioned with petrol and diesel as a net exporter, redirecting exports if needed.
- Crude oil inventories can sustain operations for about 25 days.
- Amid conflicts, refiners have avoided panic buying, focusing on vigilance and consumer protection.
Market Dynamics
The oil market has adapted to geopolitical shocks, with prices initially surging but stabilizing over time. Executives believe any crude price increase will be temporary. Despite fluctuations, retail prices of petrol and diesel have remained unchanged for about three years, reflecting a strategic decision from state-run oil marketing companies.
