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To produce more LPG, Indian refiners have reduced output of alkylates—key additives used in motor fuels that help gasoline burn more cleanly.
People waiting with empty LPG cylinders for refilling, in a village on the outskirts of Uttar Pradesh’s Jewar district. (AFP file photo)
The global energy market is facing one of its most severe disruptions in years, with shortages in India’s cooking gas supply and record-high petrol prices in California emerging as connected outcomes of the same crisis.
The strain stems from the ongoing US-Israel-Iran war, which has disrupted trade flows through the Strait of Hormuz and tightened global fuel supplies. The waterway previously carried around one-fifth of global oil trade, and its disruption has forced countries to rely on stockpiles and alternative supply routes.
Hormuz disruption reshapes fuel flows
Iran’s blockade of the Strait of Hormuz has thrown global oil and gas trade into chaos, cutting off access to a route that previously carried about one-fifth of the world’s oil supply. As shipping routes have become uncertain, buyers across countries have been forced to draw down inventories and seek emergency alternatives to manage shortages, Reuters reported.
India, which depends heavily on imported liquefied petroleum gas (LPG) for household cooking, has been among the most affected. Before the crisis, over 90% of India’s LPG imports came from the Middle East. To protect domestic supply, the government has instructed refiners to maximise LPG production.
However, this shift has come at a cost. Refiners have reduced production of alkylates—key “motor fuel” blending components that improve gasoline quality and reduce emissions. These materials are widely used in global petrol markets, including in California, which requires cleaner-burning fuel under strict environmental rules.
LPG push tightens US fuel supply chain
The reduction in alkylate output has added pressure to already strained fuel markets in the US. California motorists, who are already paying some of the highest petrol prices in the country, are facing additional upward pressure due to tighter supply of blending components.
“With India’s LPG supply constrained by the closure of the Strait of Hormuz, refiners there are producing and exporting less alkylate, adding pressure to an already tight California gasoline market,” said Mason Hamilton, chief economist at the American Petroleum Institute.
California Energy Commission spokespersons said the state is monitoring the situation but does not expect an immediate shortage. However, analysts warn that pricing pressure may intensify during the summer driving season.
California’s average petrol price has already climbed above $6 per gallon, according to GasBuddy data, with expectations of further increases if supply tightness persists.
“The more acute the alkylate supply shortfall becomes, the higher it could push prices in California,” GasBuddy analyst Patrick De Haan said.
(With inputs from Reuters)
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