Why India Faces LPG Shortage but No Petrol or Diesel Crisis Explained
India is facing pressure in LPG supply due to disruptions around the Strait of Hormuz, a key global shipping route. However, despite these geopolitical tensions, the country is not experiencing shortages of petrol or diesel. At first glance, this may seem puzzling. All these fuels originate from crude oil, so why is only LPG affected? The answer lies in how these fuels are produced, imported, stored and distributed in India’s energy system. Petrol and diesel are largely produced domestically through India’s large refining network. LPG, on the other hand, depends much more on direct imports and has a relatively small storage buffer. Because of these structural differences, LPG supply becomes more vulnerable when global shipping routes face disruptions. Why Petrol and Diesel Supply Remains Stable Petrol and diesel supply remains stable in India because of the country’s strong refining infrastructure. India operates 23 crude oil refineries with a total refining capacity of about 248–256 million tonnes per year. These refineries process over 220 million tonnes of crude oil annually, converting imported crude into fuels such as petrol, diesel and aviation fuel within the country. Another important factor is diversification of crude oil sources. India imports crude from multiple regions rather than relying on a single supplier. This reduces the risk of supply disruptions affecting fuel availability across the country. Additionally, crude oil inventories and refinery storage provide a buffer. Even if shipments are temporarily disrupted, refineries can continue processing stored crude oil and keep petrol pumps supplied. Because petrol and diesel are produced domestically from imported crude oil, their supply chain is more resilient during global disruptions.
GAIL to Invest ₹120 Billion in Pipeline and LNG Infrastructure
GAIL (India) Limited, entered a phase of accelerated expansion, significantly strengthening India’s gas infrastructure. The company commissioned nearly 3,000 kilometres of new natural gas pipelines, expanding its national gas grid and improving connectivity across key industrial regions. The infrastructure push forms part of GAIL’s broader strategy to strengthen its liquefied natural gas (LNG) portfolio, expand petrochemical operations, and invest in green energy initiatives to support India’s evolving energy landscape. Pipeline Network Crosses 17,000 km The expansion has increased GAIL’s total pipeline network to around 17,000 kilometres, marking nearly 20% growth in grid length within the past year. This rapid expansion highlights the company’s focus on strengthening the country’s natural gas transportation capacity. One of the most significant milestones is the commissioning of the 694-km Mumbai–Nagpur stretch of the Mumbai–Nagpur–Jharsuguda Pipeline (MNJPL). The project represents an engineering milestone, as it integrates a high-capacity gas pipeline within the utility corridor of the Samruddhi Mahamarg Expressway in Maharashtra. Notably, the development was executed under the PM GatiShakti framework, which promotes coordinated infrastructure development across sectors.
What Happens If Gulf Producers Deploy ‘Nuclear Option’ To End Middle East War?
The shutdown of commercial traffic through the Strait of Hormuz has suddenly handed Gulf oil producers enormous leverage over the escalating Middle East war. With roughly 15 million barrels per day of crude exports effectively stranded, Gulf Cooperation Council (GCC) nations could deploy what amounts to an energy “nuclear option”: declaring force majeure across their oil and gas exports and deliberately removing another 20% of global supply from the market. Such a move, unpacked in an opinion piece in Middle East Eye, would instantly trigger a global economic shock and could force the United States and Israel to reassess their military campaign against Iran. Over the weekend, the Strait of Hormuz effectively stopped functioning as a commercial shipping route. According to vessel tracking data, zero commercial crossings were recorded on Saturday–down from roughly 2.6 crossings per day since the war began and about 135 daily crossings before the conflict. The disruption has prompted emergency diplomatic discussions in Europe, where foreign ministers are meeting Monday to consider naval escorts for tankers attempting to transit the waterway. The de facto closure of the passage has resulted in severe economic losses for GCC countries, with estimates that approximately 14.8 million barrels of oil produced by GCC nations every day are left stranded without a viable export route. Collectively, these countries could be losing up to $1.2 billion in export revenues per day, and are estimated to have lost more than $15 billion in oil and natural gas revenues since the conflict began. The GCC includes Saudi Arabia, UAE, Qatar, Kuwait, Oman, and Bahrain. Gulf producers could be willing to bet that cutting off another 20% of the world’s oil supply could force the U.S. and Israel to stop attacks on Iran. After all, there’s little incentive at the moment for the two to stop the war, with Israel relying on its deep-pocketed ally to finance operations while Trump has repeatedly stated he is “not ready to declare victory” or accept current negotiation terms. A collective halt of oil exports would trigger a major global economic shock and instantly shift the balance of power to Gulf producers, compelling the warring nations to immediately reassess their positions. The GCC has a clear justification for declaring force majeure. Saudi Aramco’s 550,000 bpd Ras Tanura refinery was shut down following a drone attack attributed to Iran on March 2. Two Iranian drones were intercepted by Saudi air defenses; however, falling debris ignited a fire at the giant facility. While the fire was quickly contained and caused only minor damage, Saudi Arabia is still bearing the full brunt of the war, with OPEC’s largest producer estimated to have lost nearly $5 billion in potential revenues so far. Meanwhile, Qatar has already declared force majeure on its LNG operations. On March 2, QatarEnergy halted liquefied natural gas (LNG) production at its major Ras Laffan and Mesaieed industrial cities following Iranian drone attacks, effectively cutting off a fifth of global LNG supply. Qatar’s Ras Laffan Industrial City serves as the primary hub for the country’s massive LNG operations and is home to the world’s LNG export complex. The city’s LNG plant features 14 LNG trains with a production capacity of approximately 77 million metric tonnes per year (mtpa). Thankfully, most GCC nations have the necessary wherewithal to pull off such a drastic move thanks to their massive sovereign wealth funds. GCC SWFs are some of the largest in the world, managing approximately $5 trillion in assets, or nearly 40% of global SWF assets. Saudi Arabia’s Public Investment Fund (PIF) is the fifth-largest sovereign wealth fund in the world with ~$1.2 billion in assets. By mid-2025, the PIF’s assets surpassed SAR 4.3 trillion ($1.15 trillion), marking a significant increase from 2024, aided by transfers of Aramco stakes and portfolio performance. Approximately 80% of the PIF’s investments are focused within Saudi Arabia to drive Vision 2030 goals, with 55% of the portfolio allocated to alternative assets. Meanwhile, Abu Dhabi Investment Authority (ADIA) manages ~ $1.1 trillion in assets while Kuwait Investment Authority (KIA), the world’s oldest sovereign wealth fund, manages over $1 trillion. Saudi Arabia and its Gulf neighbors would normally be among the biggest beneficiaries of a sharp oil rally. Brent’s surge above $100 per barrel dramatically improves fiscal revenues for producers that rely heavily on crude exports to fund government spending and large-scale development programs. Riyadh in particular has spent years pushing for higher oil prices to support its ambitious Vision 2030 economic transformation plan. But the current crisis has created a far more complicated equation. With the Strait of Hormuz effectively shut and millions of barrels of Gulf crude unable to reach global markets, the price spike offers only limited relief if producers cannot physically move their oil. GCC nations could be in a world of pain unless the Middle East conflict is quickly resolved, with estimates that Gulf GDP could drop by as much as 22% if the conflict carries on for 3-6 months. While Gulf states possess significant sovereign wealth funds to mitigate short-term impacts, prolonged closure is expected to cause severe fiscal pressure and widen their current account deficits.