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ECONOMICS · 20 MIN · 13 MARCH 2026 · TAKARO EXPLAINS

LPG and the Iran Shipping Squeeze

Where does the gas in your kitchen come from, and what if the ships stop?

When Iran threatened to close the world's most important oil shipping lane, millions of Indian kitchens felt it. We break down what LPG is, where India gets it from, and why a conflict thousands of kilometres away can affect the food on your plate.

LPG and the Iran Shipping Squeeze

Lens: the mechanism

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LPG and the Iran Shipping Squeeze

THE STORY

What happened, in plain words

THE SHORT ANSWER

Most Indian kitchens cook with LPG, and India imports more than 60% of it, mostly through the Strait of Hormuz. When the Iran–US conflict disrupted ships there, supplies fell. India has less than two days of LPG in reserve, so the government put households and schools first.

How one thing led to the next

1. IT STARTS WITH

Conflict near the Strait of Hormuz

2. SO

Gas tankers can't get through

3. THEN

LPG imports fall

What is LPG — and why your kitchen depends on the world

LPG stands for Liquefied Petroleum Gas. It is the fuel inside those metal cylinders in most Indian kitchens — the invisible ingredient behind every dal, every roti, every cup of chai. Unless you are cooking on an electric induction stove, you are almost certainly using LPG. India is the second largest LPG consumer in the world.

Everything starts with crude oil — the thick, dark liquid extracted from the earth. At refineries, that crude gets separated into many products: petrol, diesel, kerosene, and LPG. So when you fill up your kitchen cylinder, you are connected — without knowing it — to oil fields thousands of kilometres away, shipping lanes in the Middle East, and decisions made by governments you have never thought about.

THE SHORT ANSWER

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Where does india's LPG come from?

India imports more than 60% of its LPG. And roughly 90% of those imports travel through one critical chokepoint: the Strait of Hormuz, a narrow channel of water between Iran and Oman that connects the Persian Gulf to the open ocean. Qatar leads our LPG imports at about 30%, UAE at around 25%, followed by Saudi Arabia, Kuwait, and — increasingly — the United States.

For crude oil, Russia is India's biggest supplier at 37%, followed by Iraq, Saudi Arabia, and UAE. Nearly all of these countries sit right around the same small stretch of water — their ships all exit through the Strait of Hormuz.

KEY TRADE FACT

India is the third largest crude oil importer in the world. Every decision that affects Middle Eastern energy supply — a war, a blockade, a political standoff — lands in India's energy equation within weeks.

Why is there a shortage right now?

Iran is fighting a conflict with the United States. As part of that conflict, it has threatened to close the Strait of Hormuz to shipping. Ships carrying LPG and crude oil from Qatar, UAE, Saudi Arabia, Kuwait, and Iraq have been disrupted. When ships cannot pass through, supply stops.

India has been careful to stay neutral in this conflict. That neutrality has paid off — Iran has allowed some Indian tankers through. Partly this is diplomatic respect, but partly it is economics: Iran exports oil too and needs the revenue. Blocking everyone would hurt Iran as much as its adversaries.

THINK OF IT THIS WAY

The Strait of Hormuz is like a single door connecting an enormous warehouse to the rest of the world. Most of the Middle East's oil exits through that one door. Iran currently holds the key and decides who gets to pass.

The numbers that matter — and india's response

India has about 70 days of crude oil in reserve — stored in underground caverns, refineries, and floating offshore platforms. But LPG? India has less than two days of LPG reserve. Less than 48 hours of national supply.

LPG is hard to stockpile because it is a compressed, highly flammable gas requiring specialised infrastructure. The Indian government has responded by rationing: households and educational institutions get first priority. Restaurants and commercial users have been deprioritised. India is also diversifying imports from Australia, Algeria, Canada, and the US.

GOVERNMENT RESPONSE

The Government of India has placed households and educational institutions at the top of the LPG delivery priority list. Restaurants and commercial users have been deprioritised until supplies normalise.

The butterfly effect — one chokepoint, a thousand ripples

This is not just a cooking gas problem. Restaurants that cannot get LPG have to close — and every closed restaurant means chefs, servers, dishwashers, delivery drivers, and food suppliers all affected. Every closed restaurant is a dozen or more livelihoods on pause.

The disruption hits aviation too. Airline fuel is one of the most refined petroleum products. As crude prices rise, flight tickets get expensive, tourism falls, and hotels suffer. That is crude oil in the Persian Gulf directly affecting whether you can afford a weekend trip to Goa.

THE BUTTERFLY EFFECT

A conflict in the Persian Gulf touches the price of your samosa, the availability of your flight, and the livelihoods of people in industries that seem completely unrelated to oil.

4. WHICH MEANS

India has under two days of reserves

5. AND THAT RESULTS IN

LPG is rationed and restaurants close

WHERE IN THE WORLD

The Strait of Hormuz, a narrow channel between Iran and Oman that links the Persian Gulf to the open ocean.

TRENDING IN CLASS

CLUES

Facts to hold on to

1

India imports more than 60% of its LPG, and about 90% of that passes through the Strait of Hormuz.

4

Households and schools now get LPG first, and restaurants come later.

2

India has about 70 days of crude oil in reserve but less than two days of LPG.

5

India stayed neutral, and Iran has let some Indian tankers through.

3

India is the second largest LPG consumer in the world.

THE MECHANISM

The idea that helps you read this case

The mechanism is a supply chain with one narrow door. LPG comes from crude oil refined in the Gulf and is shipped through the Strait of Hormuz. When ships cannot pass, supply stops, and because LPG is hard to store, India has almost no cushion, so the shortage reaches kitchens within days.

ASK YOURSELF

  • Why does one narrow strait matter so much?

  • Why is LPG harder to stockpile than crude oil?

Words to know

LPG

Liquefied Petroleum Gas: a fuel made from refined crude oil, compressed into liquid form and stored in cylinders.

Strait of Hormuz

A narrow waterway between Iran and Oman connecting the Persian Gulf to the open ocean; about 90% of India's LPG imports travel through it.

Strategic reserve

A stockpile of an essential resource kept by a government for emergencies; India has about 70 days of crude oil, but less than 2 days of LPG.

Trade embargo

When a country officially blocks or restricts trade with another, often as a political tool.

Crude oil

The raw, unrefined oil extracted from the earth, processed into petrol, diesel, LPG, and kerosene.

Supply chain

The full sequence of steps from raw material to finished product to end user.

Import diversification

The strategy of buying from multiple countries to reduce the risk of shortages if one source is disrupted.

THE OTHER SIDE

What the other side says

A fair look means hearing the people who disagree. Read this before you decide.

  • India is buying LPG from more countries, including Australia, Algeria, Canada and the US.

  • Iran needs oil money too, so it has let some ships through.

  • LPG is a flammable gas, so storing large amounts is costly and needs special equipment.

YOUR ANSWER

What do you think?

There is no single right answer here. Pick one question, use the story and a clue and explain your thinking. 

QUESTION A

Neutral or careful?

Is India's neutrality a real principle, or mainly about protecting its gas supply? Can a country always stay neutral?

QUESTION C

Who gets gas first?

When a government must share out something scarce, how should it decide who comes first? Who loses when a restaurant closes?

QUESTION B

Better prepared?

India has 70 days of crude oil but under two days of LPG. What should India do now, and who should pay?

PRESENT IT IN 2 MINUTES

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2

3

What happened? Use the story and one clue (30 seconds)

​

The Mechanism? Name the idea (45 seconds)

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What should be done? Give your answer (45 seconds)

DIG DEEPER

Why does India keep 70 days of crude oil in reserve but less than two days of cooking gas?

TRY THIS AT HOME

Find out how long one LPG cylinder lasts in your home, and list three ways your family could make it last longer.

HOME PRACTICE

Now try it with a case of your own.

Now try it with a case of your own.

YOUR CASE FILE

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TRY IT FIRST, THEN PEEK AT THE EXAMPLE

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STEP 1

Case Summary

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STEP 1

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STEP 1

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KEY POINTS FROM THE EPISODE

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YOUR TURN

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Choose reliable news sources, and work with your parents, educators or peers to understand the case. 

Classroom Lesson Plan
Discussion questions, a hands-on classroom activity, and grade-band standards alignment — grades 4–9.
Discussion questions

A — India's neutrality: smart strategy or convenient avoidance?
Educator prompt: The episode explains that India stayed neutral in the Iran-US conflict, which helped it get some Iranian tankers allowed through the Strait. But Kiran noted it is "very tough not to be affected" and that Iran's decision is partly driven by economic interests. Ask students: Is India's neutrality a genuine diplomatic principle, or mainly about protecting its own supply chain? Can a country always stay neutral in major global conflicts?

B — Should India have been better prepared?
Educator prompt: India has less than 2 days of LPG reserves but 70 days of crude oil. Ask students: Is that a reason to accept the vulnerability, or a problem that should have been solved long ago? What could India do — build more storage, diversify fuels, encourage electric stoves? Who should pay?

C — Who pays when a restaurant closes?
Educator prompt: Restaurants have been deprioritised for LPG. Ask students to think about who loses when a restaurant closes: the owner, cooks, servers, cleaning staff, food suppliers. When a government must ration a scarce resource, how should it decide who gets priority?

Every week. One story. One subject. A little more clarity.

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