Four Months of Gas Rationing: What the Hormuz Closure Taught India About LNG Dependence

On 4 July 2026 the Government of India withdrew the Natural Gas (Supply Regulation) Order it had issued in March, ending four months of emergency gas rationing. The gazette notification said the conflict in the Middle East that had disrupted LNG shipments through the Strait of Hormuz was now subject to a ceasefire and negotiations, and that sea traffic through the strait had been permitted to resume. The order had been issued after suppliers invoked force majeure and LNG cargoes dried up.

According to The Hindu BusinessLine, the closure affected almost half of India's LNG consumption. India came through the episode without the industrial collapse or household shortages some feared. That outcome reflects a rationing order that was well targeted and fertiliser stocks that had been built up in advance. The BusinessLine report, citing a Gastech study, notes that India is the fourth-largest LNG importer in the world. Qatar's long-term contracts with Petronet LNG are the backbone of India's gas supply.

The order used powers under the Essential Commodities Act to set priorities. Domestic piped natural gas for households and compressed natural gas for transport received 100 per cent of their requirements. Fertiliser stocks stood at 180.12 lakh tonnes ahead of the kharif season, 36.6 per cent higher than a year earlier, with urea at 61.51 lakh tonnes, DAP at 25.17 lakh tonnes and NPK at 56.30 lakh tonnes. India diversified its LNG suppliers over the past decade, signing contracts with US, Australian and other sellers.

India holds strategic crude oil reserves but has no significant underground gas storage. City gas for commercial users, gas for some industrial heat and gas for power generation can all be replaced, at least partly, by electricity or other fuels. India should pursue route diversity actively, favouring supply from the Atlantic basin, Australia and East Africa for new contracts, even at a modest premium.