India’s LPG Demand Projected to Drop by 100,000 Barrels Per Day in 2026 Following Strait of Hormuz Closures

India’s demand for liquefied petroleum gas (LPG) is expected to decline by approximately 100,000 barrels per day (b/d) in 2026. According to data from Kpler, the closure of the Strait of Hormuz (SoH) impacted roughly 90 per cent of the country's imports of the cooking fuel.

The supply disruption left India heavily exposed to reduced flows through the Strait of Hormuz. This supply shock directly affected end-use consumption, forcing the government to implement measures such as the rationing of LPG deliveries, data from Kpler showed.

Priti Mehta, Kpler’s Senior Oil Demand Modelling Analyst, noted that LPG demand is anticipated to recover from its lows in the second and third quarters of 2026 during the final quarter, aided by the festival season and higher imports. However, this recovery is expected to remain incomplete.

Indian LPG demand is forecast to increase by only about 60,000 b/d in 2027, recovering slightly more than half of the decline experienced in 2026. A portion of the remaining loss is likely to be structural as the government promotes piped natural gas (PNG) connections, particularly among urban households linked to city gas distribution networks. Mehta stated that Indian LPG demand will remain constrained by the continued expansion of PNG.

On a global scale, LPG demand is projected to increase by 420,000 b/d next calendar year. Asia is expected to account for approximately 250,000 b/d of this growth, while the Middle East, Africa, and Europe are each projected to add around 40,000 b/d. European growth is primarily tied to the start-up of new propane dehydrogenation capacity, while African demand is expected to recover alongside improved product availability and normalising prices.

Meanwhile, global diesel demand is expected to decline by 500,000 b/d in 2026, making it the hardest-hit refined product globally. This contraction is heavily concentrated in the second and third quarters of 2026, when demand is forecast to drop by 970,000 b/d and 810,000 b/d year-on-year, respectively.

However, India stands out as a major exception to this global trend. Indian diesel demand is forecast to increase by around 90,000 b/d in 2026. Mehta explained that this growth is supported by domestic economic activity, weaker monsoon conditions, and incomplete retail price pass-through, which has shielded consumers from absorbing the full impact of international fuel cost increases.

Similarly, global gasoline demand is projected to decline by 330,000 b/d in 2026, marking a downward revision of 450,000 b/d from the pre-conflict outlook. Unlike LPG and naphtha, where reduced supply has directly limited feedstock consumption, gasoline demand has been impacted primarily by higher pump prices and government-led conservation measures, with Asia and North America accounting for the majority of the reduction.

Once again, India remains a distinct exception in the gasoline sector. Demand in the country is expected to increase by 60,000 b/d in 2026, as incomplete price pass-through continues to shield local consumers from much of the international cost shock.

"The projected drop in India's LPG demand highlights how geopolitical supply shocks can directly force domestic energy rationing and accelerate structural shifts toward alternatives like piped natural gas. At the same time, the resilience in Indian diesel and gasoline consumption demonstrates how domestic pricing mechanisms and localized economic activity can completely decouple local markets from broader global contractions. Businesses and energy sector stakeholders must carefully factor these localized consumption patterns into their long-term operational planning." — Dr. Shishir Gupta, Founder & CEO, StartupLanes