Full Breakdown
Impact of the US-Israel War on India's Energy Supply
3/21/2026, 3:02:20 PM
Disruptions in Energy Supply Chains
The ongoing conflict between the United States, Israel, and Iran, which escalated on February 28, 2026, has significantly disrupted shipping routes through the Strait of Hormuz, a critical passage for global energy supplies. Approximately one-fifth of the world's oil and gas, including about half of India's liquefied natural gas (LNG) imports, transits through this chokepoint. As a result, India is experiencing severe gas shortages, prompting a potential shift back to more polluting fuels such as coal, kerosene, and biomass.
Immediate Consequences for Households and Industries
Reports indicate that panic-buying of cooking gas has surged, with some regions witnessing increased sales of biomass fuels like cow dung cakes. The Indian government has responded by approving an additional 48,000 kilolitres of kerosene for distribution to low-income households. Petroleum Minister Hardeep Singh Puri confirmed that kerosene is being made available through retail outlets and public distribution systems. However, experts warn that a return to kerosene and coal could exacerbate indoor air pollution and health issues.
The ceramics industry in Morbi, Gujarat, which produces about 80% of India's ceramics, has been particularly hard hit, with nearly 80% of factories shutting down due to gas shortages. This shutdown affects around 400,000 workers, many of whom are migrant laborers. The uncertainty surrounding gas availability has left manufacturers unable to maintain production, leading to potential domestic shortages and delays in export orders.
Urban vs. Rural Energy Dynamics
Urban households are more vulnerable to fuel shortages than their rural counterparts, as they have fewer fallback options. While some urban residents may turn to electric cooking as an alternative, this could increase demand for electricity, much of which is generated from coal. In contrast, rural households may resort to biomass fuels or subsidized kerosene, although the availability of these alternatives varies.
Government and Industry Responses
The Indian government is actively engaging with global partners to secure energy supplies and has announced a financial relief package of INR497 crores for exporters affected by the disruptions. Foreign Minister S. Jaishankar has expressed hope that diplomatic talks with Iran will alleviate the situation. Meanwhile, the government has prioritized gas distribution for households and essential sectors, although industrial users are facing supply cuts.
Conflicting Reports and Future Outlook
While some reports indicate that supplies have not been completely halted, the situation remains precarious. The flow of LNG from Qatar has been disrupted since March 2, 2026, raising concerns about future availability. India's reliance on imported LNG, coupled with the lack of strategic reserves, highlights a structural vulnerability in its energy supply chain.
As the conflict continues, both households and industries are likely to face increased energy costs. The immediate risk for urban consumers is not just a shortage but rising prices, which could lead to broader economic implications if the situation persists.
Verbatim Quotes
- “Kerosene is being made available through retail outlets and PDS channels,” — Hardeep Singh Puri, Petroleum Minister
- “ Prajapati offers a clearer picture: "Factories that rely on propane have shut as supplies have dried up.” — Amit Prajapati, Manufacturer
- “The gas price is 500 per kg. What can we do? We are looking for gas for the past four days but haven't received any. We used to cook by using woods but the room owner has prohibited us. We will come back when things return to normal,” — Migrant Worker
- “There is some price rise expected,” — Rahul Chopra, Managing Director, Haryana City Gas Distribution Limited
The ongoing conflict in West Asia poses significant challenges for India's energy security, with immediate impacts on both domestic consumers and industrial sectors.
