India is facing growing disruptions to its gas supply as the conflict in the Middle East escalates, with shortages already reported in major cities and price increases impacting consumers and industries. The crisis follows a warning from Iran that it will blockade oil shipments from the region if attacks continue, a threat echoed by President Donald Trump’s own warnings of forceful retaliation.
Domestic cooking gas prices have risen by Rs 60 per cylinder, while commercial LPG prices increased by Rs 114.5, according to reports. The surge in prices comes as European natural gas prices jumped nearly 40% last week following the halt of production at a key LNG facility in Qatar amid heightened regional tensions, as reported by NBC News.
In response to the supply constraints, the Indian government today issued the Natural Gas (Supply Regulation) Order 2026, prioritizing the allocation of gas to PNG, CNG, and LPG production. However, concerns persist regarding the potential for prolonged supply cuts if the Middle East conflict continues.
Several sectors are bracing for significant impact. Fertilizer companies, including GNFC, Chambal Fertilizers, RCF, FACT, and Deepak Nitrite, are particularly vulnerable, as urea production relies heavily on imported LNG. Gujarat Narmada Valley Fertilizers & Chemicals (GNFC) reported on Friday that its supplier, GAIL, issued a force majeure notice, restricting its LNG allocation to 60% of its contracted quantity, impacting Neem Urea production. The company’s stock fell more than 5% on Monday before partially recovering after the government’s order prioritizing fertilizer plants for 70% of their average gas supply over the past six months.
The restaurant industry is also facing challenges, with supply shortages reported in cities like Mumbai and Bengaluru. Food delivery companies Eternal and Swiggy, along with quick-service restaurant operators such as Jubilant Foodworks (Domino’s), Devyani International, Sapphire Foods (KFC and Pizza Hut), Westlife FoodWorld (McDonald’s), and Speciality Restaurants (Mainland China) are all potentially affected. India imports more than 60% of its LPG needs, with 85-90% of those imports passing through the Strait of Hormuz.
The Ministry of Petroleum & Natural Gas has taken steps to regulate LPG supplies, directing oil refineries to increase production and prioritizing domestic supply to households, hospitals, and educational institutions. A 25-day inter-booking period has been introduced to prevent hoarding and black marketing.
Gas importers, transporters, and distributors – including IGL, MGL, Petronet LNG, and GAIL – are facing simultaneous volume and price risks. Petronet LNG faces direct exposure to cargo disruptions from Qatar, while GAIL may experience reduced throughput volumes. City gas distributors IGL and MGL are grappling with securing supplies and passing on sharply higher costs to consumers.
Tile manufacturers, particularly those in Morbi, India, are also at risk, as LNG and propane account for approximately 70% of their fuel needs. Jefferies analysts estimate that a 5% rise in fuel costs could impact earnings per share by 5-7%.
Auto ancillary companies like Samvardhana Motherson may face cost pressures from rising gas prices in Europe, while consumer durables manufacturers, including PG Electroplast, Amber Enterprises, LG Electronics India, Voltas, Blue Star, and Hitachi Energy India, are also facing supply restrictions. PG Electroplast reported receiving notice that its supply contracts are subject to force majeure.
Other companies potentially affected include glass makers like Borosil Renewables, as well as SRF, Finolex Industries, Styrenix, and Aarti Industries. Borosil Renewables’ Executive Chairman, Pradeep Kheruka, stated that the company has backup fuel and operations are currently normal, despite receiving a force majeure notice.
President Trump has repeatedly stated his intention to keep the Strait of Hormuz open, even framing it as an “honor” to do so for the benefit of countries like China, according to reports from NHK World. However, Iran’s Islamic Revolutionary Guard Corps has vowed to prevent the export of any oil from the region if attacks continue, creating a continuing standoff.