LPG crisis: Is the Strait of Hormuz blockade India's biggest energy security test yet?

The rapidly escalating crisis in West Asia has sent shockwaves through the world's energy supply. Iran has effectively closing the Strait of Hormuz, a narrow channel through which nearly a third of the world's LPG passes, after joint strikes by the U.S. and Israel killed Supreme Leader Ayatollah Ali Khamenei and several other leaders. The West Asian country has also hit Israel and American bases in the Persian Gulf, and also targeted oil and gas facilities in the region.

The conflict has hit India particularly hard. The country imports a majority of its crude oil needs and nearly 90% of its LPG from that region and the closure of the Strait of Hormuz has hit supply of all crude oil products. LPG has been the worst hit, as India does not hold a strategic reserves of the product.

From commercial LPG shortages hitting restaurants and industries, to long queues at cylinder distribution centres, the crisis is playing out in real time. The government has moved fast, invoking the Essential Commodities Act, ramping up refinery production, and reaching out to alternative suppliers. 

In this episode, we go beyond the immediate shortage and ask the harder questions. Why does India's storage infrastructure leave it so exposed to disruptions like this? Was the decision to reduce Russian oil purchases, widely seen as a concession to secure a US trade deal, a miscalculation that made this crisis worse? And with the government likely to absorb all additional costs, what kind of pressure does that put on India's finances? And, what would happen if crude hits $200 a barrel and the Hormuz disruption runs for months?

Guest: Narendra Taneja, Energy expert 

Host: Nivedita V

Edited and produced by Sharmada Venkatasubramanian

Learn more about your ad choices. Visit megaphone.fm/adchoices