Escalating Conflict in West Asia Threatens India's LNG Supply Chain

India's natural gas supplies face significant disruption due to military conflict in West Asia impacting the Strait of Hormuz. This blockage has stalled LNG shipments, prompting India to reconsider its energy allocation for critical sectors and explore alternative sources to meet domestic demand.

In a developing crisis, GAIL (India) Ltd, India's state-run energy giant, plans to curtail natural gas supplies to select customers. This action follows significant disruptions caused by rising military tensions in West Asia, which have blocked roughly 30% of India's imported LNG shipments.

The conflict has led to joint US and Israeli military actions against Iranian targets, provoking Iran's Revolutionary Guards to warn vessels from transiting the critical Strait of Hormuz. This response has resulted in major insurers withdrawing or increasing war-risk coverage, and several shipping lines have suspended tanker movements.

India, highly dependent on LNG imports from the Gulf, sees more than half of its LNG pass through this narrow sea lane. Now, with LNG shipments suspended, India must prioritize critical sectors such as fertiliser production and explore alternative LNG sources to mitigate the impact.