India’s LPG Demand Predicted to Decline by 100,000 Barrels per Day by 2026

The recent supply shock affecting India’s liquefied petroleum gas (LPG) consumption underscores significant changes in the nation’s energy landscape. A closure of the Strait of Hormuz has led to a projected decline in LPG demand by approximately 100,000 barrels per day (b/d) in 2026. The Indian government has intervened with measures such as rationing LPG deliveries to mitigate the immediate impact on consumers. Analysts from Kpler suggest that while demand may partially recover in Q4 of 2026, it will not fully rebound as the market adapts to structural changes, including the promotion of piped natural gas (PNG). Additionally, global diesel and gasoline demand are also facing contractions, though India is projected to see growth in these sectors due to unique market dynamics.

This situation has direct implications for the common citizen and the broader market. The rationing of LPG deliveries may lead to increased household expenditures and potential shortages, particularly in rural areas where LPG is a primary cooking fuel. On the market front, while India’s diesel and gasoline demands are set to rise despite global trends, consumers might face higher costs in the long term as international prices and market dynamics normalize. Thus, household budgets could be strained, especially for lower-income families who rely heavily on subsidized fuels.

Looking ahead, the Indian government and the Reserve Bank of India (RBI) will need to assess their policies critically to navigate the ongoing energy crisis. As the transition towards PNG accelerates, regulatory support will be crucial to ensure an economically viable and consumer-friendly rollout. Long-term strategies may include diversifying energy sources and enhancing domestic production capabilities to insulate the Indian economy from geopolitical shocks. Policymakers will likely also focus on monitoring inflationary pressures stemming from energy costs, setting the stage for potential interventions in both subsidy frameworks and price controls to safeguard consumer welfare.

Source: The Hindu

(Expert Note: This report was independently prepared by the Wealthova Economy team.)