New Delhi, India – India, the world's largest importer of liquefied petroleum gas (LPG), saw its cooking gas import bill surge by an estimated $1.1 billion in the six months following the US-Israel strikes on Iran, which impacted the Strait of Hormuz. A report by the Centre for Research on Energy and Clean Air (CREA) indicates that the nation paid 29% more per tonne for imported LPG than pre-war market expectations.
Significant Price Hikes and Reduced Imports
The energy crisis triggered by the geopolitical events pushed up cooking gas costs significantly. Unlike crude oil, LPG pricing for much of Asia is closely tied to Saudi Aramco's monthly contract prices, which saw a sharp increase. The Saudi contract price for LPG rose from $545 per tonne in February to $750 per tonne in April, a 38% jump, peaking at $760 per tonne in June.
- Butane, comprising over half of India's LPG purchases, experienced an even steeper rise, with its official selling price increasing by 48% to $800 per tonne in April.
- Concurrently, India imported 26% less LPG during this six-month period than anticipated. March, the first full month after the conflict, saw imports plummet by 49% compared to the average monthly volume of the preceding two years.
Financial Impact and Shifting Supply Chains
CREA estimates India's total imported LPG bill for the period at approximately $4.7 billion, with roughly one-fifth of this representing the additional cost due to the price shock. For a standard 14.2-kg domestic cylinder, the import-parity cost rose by about $1.80, or 29%, peaking at an additional $2.90 in May. It's important to note these figures represent import-parity costs and do not include subsidies, taxes, or distribution margins paid by households.
The supply mix also shifted, with the US share of India's LPG imports rising from 8% in February to 32% in April, partially compensating for reduced volumes from the Gulf region.
CREA cautions that its $1.1 billion estimate only covers LPG actually purchased by India. The economic cost of cooking gas that households may have forgone due to decreased affordability is not included in this assessment.