How the Iran War Is Breaking India’s Energy Security — And What Must Change
India energy security has been exposed as dangerously fragile by the Iran war — and the crisis did not begin on February 28 when the US and Israel struck Tehran. It began decades earlier — when India made a quiet, consequential decision to tie its energy lifeline to a single region, a single waterway, and a single geopolitical assumption: that the Gulf would always be stable enough to keep the oil and gas flowing.
That assumption is now in pieces. India’s crude basket has jumped to $120 per barrel — a 50% spike in less than a week after the war began. The government has invoked the Essential Commodities Act of 1955. Congress MP Shashi Tharoor has warned that if the war drags on, India would not be left with many options regarding energy imports.
This article is not about the immediate shortage — we covered that in our analysis of the LPG crisis. This article is about the deeper structural failure that made India this vulnerable, what the government is doing about it right now, and what India must build before the next crisis arrives.
How Dependent Is India — Really?
Domestic LPG production covers only 40% of national consumption, forcing India to import the remaining 60%. Middle Eastern suppliers account for roughly 90% of India’s LPG imports. Qatar accounted for approximately 34% of India’s LPG imports. UAE supplied nearly 26%. Kuwait contributed around 8.3%. Almost all of these shipments pass through the Strait of Hormuz.
The government has repeatedly noted that strategic reserves remain sufficient for at least 25 days of crude oil and LPG, and 10 days for LNG. Twenty-five days. That is how much buffer India has between a closed strait and a full-blown domestic energy emergency.
India’s LPG consumption reached a historic high in February 2026, at 2.8 million tonnes — a 10% year-on-year increase, driven by the Ujjwala Yojana scheme which brought total LPG connections to more than 310 million households. The government’s own success in expanding LPG access has made India more vulnerable — more households dependent on a single fuel source that flows through a single chokepoint.
What the Government Did — Step by Step
On March 10, the government invoked the Essential Commodities Act of 1955, notifying the Natural Gas (Supply Regulation) Order, 2026. The order established a four-tier priority system: Tier 1 covers full requirements for domestic PNG and LPG production. Tier 2 covers fertiliser plants at 70%. Tier 3 covers manufacturing consumers at 80%. Tier 4 covers industrial and commercial consumers at 80%.
Domestic LPG production from refineries has been increased by about 38%. Under Operation Sankalp, the Indian Navy has been placed on standby to provide escorts for merchant tankers. An attack on the tanker Skylight on March 1, which killed two Indian crew members, added urgency.
Modi’s second call with Iranian President Pezeshkian focused on shipping routes and energy security. According to Bloomberg, the Iranian Navy has in some cases guided Indian vessels through the strait along pre-approved routes. The result: two Indian-flagged LPG tankers — Shivalik and Nanda Devi — carrying a combined 92,000 tonnes of LPG reached Indian ports on March 16 and 17. Discussions are underway for six more LPG carriers carrying 270,000 tonnes — roughly three days of Indian consumption.
The Alternative Supply Hunt
On March 5, the US Treasury Department issued a 30-day waiver allowing Indian refiners to purchase Russian crude oil already at sea. Vessels from Russia and Jordan carrying LPG, oil and fertilisers are set to dock at Indian ports in coming days.
A possible alternative is Iran itself. Iranian LPG cargoes are well-suited to Indian specifications, and Tehran has been supplying large volumes to China and Pakistan. However, India has refrained from purchasing Iranian energy due to US sanctions. Should the disruption persist, New Delhi may face a difficult choice between strict compliance with sanctions and the urgent need to secure fuel supplies.
This is the sharpest dilemma India faces. The fuel it needs most is sitting in Iran — a country India has deep historical ties with, whose Chabahar port India has invested over $1 billion in, and whose LPG specifications match India’s needs perfectly. But buying Iranian LPG risks triggering secondary sanctions from the US at a moment when India is also finalising a bilateral trade deal with Washington.
The China Comparison India Should Study
China seems relatively resilient to these shocks, particularly in its transport sector. The country’s rapid electrification across key sectors, renewable supply chains, and critical mineral stockpiles offer a model for reducing exposure to fuel supply disruptions.
China saw the same Hormuz vulnerability a decade ago and systematically built its way out — through electric vehicles, domestic battery manufacturing, strategic petroleum reserves of over 90 days, and pipeline infrastructure that bypasses sea routes entirely. India has made progress on renewables and LPG access — but the focus on expanding access without building supply resilience left India vulnerable.
What India Must Build — The Five-Point Plan
| Priority | What India Must Build |
| 1. Strategic LPG reserves | Build 45-60 day LPG storage at coastal terminals. India currently has only 25-day crude reserves and almost no LPG buffer. |
| 2. Supply diversification | Deals with Norway, Canada, Australia, US to reduce Gulf dependence below 50% within five years. Current US deal covers only 10%. |
| 3. Cape of Good Hope routing | Pre-negotiate contracts for alternative Cape routing bypassing Hormuz. Extra 10-14 days transit time is an insurance premium worth paying. |
| 4. Piped natural gas expansion | Every PNG household reduces Hormuz exposure. City Gas Distribution expansion must be treated as a national security project. |
| 5. Electric cooking | Fast-track induction cooking powered by India’s growing renewable capacity. This is the long-term structural answer to LPG dependency. |
ThirdPol’s Take
India’s energy security failure in 2026 is a policy failure that was clearly visible for years before the Iran war made it undeniable. Every major think tank, every energy ministry report flagged India’s Hormuz dependence as a critical vulnerability. The recommendations existed. The political will did not.
Tharoor was right when he said it was crucial for India to diversify its energy imports. But diversification takes years to build and minutes to lose. The window between today’s crisis and the next one is the only time India has to act — and historically, India has used such windows to write reports, not build infrastructure.
This time must be different. The 25-day reserve buffer is not a strategic cushion. It is a countdown clock. And every day India does not build the alternative supply chains, the storage capacity, and the clean energy infrastructure to replace Gulf LPG, that clock keeps ticking.
The chai in Jaipur will taste normal again soon. The question is whether India will use this crisis to ensure it never tastes wrong again.
Amit Mangal writes on India’s foreign policy and geopolitics at ThirdPol. Follow ThirdPol on X and LinkedIn.