War and Heat: India under pressure
India is facing energy security challenges as supply disruptions and early heatwaves increase prices and strain infrastructure. In this edition of the India Energy and Climate Pulse, we discuss the consequences of these events highlight the country’s vulnerability and raise concerns about the resilience of its energy system.
By: Robbie Andrew (CICERO), Shivika Mittal (CICERO)
LPG’s central role in India’s kitchens, and reliance on imports
Many of India’s households are reliant on delivery of LPG cylinders for preparing food, and supply disruptions have led to large adjustments.
India has intentionally been transitioning households from use of traditional biomass for cooking to use of liquefied petroleum gas (LPG). In 2025, 65% of India’s demand for LPG was imported, and 90% of that came from the Middle East via the Strait of Hormuz. This key cooking fuel – delivered in cylinders to households, restaurants, and other kitchens – has also been affected by supply disruptions linked to the Iran crisis, with LPG consumption declining by 13% in April compared to April 2025, despite domestic refineries increasing their output of the fuel by 30%. The shortage has added further pressure to the strained food system and exacerbates broader food security concerns. In response, there has reportedly been a surge in the purchase of induction cooktops. However, these alternatives are not affordable to low-income groups who have limited resilience to these shocks, further exacerbating inequalities.
Prioritising use of constrained natural gas supplies
With limited domestic production, surging prices for imported natural gas have forced prioritisation.
The government maintained deliveries of so-called “City Gas” while other sectors’ use declined sharply in March. Consumption of City Gas – which includes both piped natural gas to households and commercial as well as compressed natural gas for road transport – was maintained in March, while natural gas usage in other sectors such as refineries, power plants, and fertilizer producers declined sharply. This divergence is primarily driven by government priorities and sectoral flexibility. Households have limited short-term alternatives for cooking fuel, so natural gas supply is prioritised for city gas distribution to ensure continuous supply of cooking fuel to households. In contrast, industrial sectors are more price-sensitive and have greater flexibility to switch fuels or adjust operations. As a result, industries either reduce output – as seen in the fertilizer sector – or substitute natural gas with alternative fuels such as coal, naphtha, or furnace oil.
The government has largely insulated the country from rising transport fuel costs
The government has held retail prices of petrol and diesel relatively constant since the energy crisis of 2022 and continued this policy through to mid-May.
Oil dominates the fuel mix in India’s transport sector. To shield consumers from global crude oil volatility linked to the Iran crisis, the Government of India maintained fixed prices and reduced additional domestic special excise duty on petrol and diesel by ₹10 per litre (equivalent to about 10% of the retail prices). The estimated fiscal impact of these excise duty cuts of around ₹1 lakh crore (about 10 billion USD) annually is in addition to the losses incurred by the state-owned oil companies selling retail fuel at negative margins. The government also limited the price increase of jet fuel for domestic carriers to 25%, preventing massive industry-wide disruptions and protecting domestic air travel costs. Following state-level elections, the government finally raised the prices of petrol and diesel on the 15th of May, leading to much discussion of potential inflation.
Food production relies on fertiliser, but supplies are short
Natural gas is a key feedstock for fertiliser production, and elevated prices have led to sharp declines in output from India’s fertiliser sector.
The ripple effects of the Iran crisis aren’t limited to energy products. Before the crisis, the Gulf region supplied 20%–30% of India’s urea imports and about 30% of diammonium phosphate (DAP) imports. These are two critical fertilisers. Since the escalation of the crisis, fertiliser production has fallen by 25% compared to the same period last year because of constrained natural gas supplies. This situation is particularly concerning as the crisis occurs at the start of India’s Kharif cropping season (May–October). A forecast dry monsoon, rising temperatures, and growing shortages of fuel and fertilisers: these disruptions could further intensify existing pressures on the agricultural sector and adversely affect crop production in the coming season. To meet rising fertiliser demand ahead of the Kharif season and compensate for lower domestic production, India will import sharply more urea but at twice the previous price because of supply disruptions due to closure of the Strait of Hormuz, significantly increasing the government’s fertiliser subsidy burden.
Heat led to high demand for power, but supply was insufficient
April saw an intense heatwave, with one data website concluding that all of the top 50 hottest cities in the world were in India on the 27th of April.
India suffered a very significant heatwave in 2022, which World Weather Attribution points out was a very rare and extreme event, marking the hottest year since 1901. However, the frequency, duration, and intensity of heatwaves in India are increasing due to climate change, making rare events less rare. While India has successfully narrowed the electricity supply-demand gap, the remaining gap becomes critical as heatwaves intensify, making it crucial to meet power demand, especially for cooling. However, increases in transmission capacity, grid connections, and storage have lagged expanding generation capacity, particularly from variable renewable energy sources. Peak demand is rising every year, largely due to more widespread use of air conditioning. During the April 2026 heatwave – now likely to occur about once every five years – India faced several consecutive days of electricity shortages, peaking at 45 GWh on 25th April, while the rarer 2022 saw shortages peak at 214 GWh. With the heatwave, natural gas-fired power stations were required to increase generation despite very high fuel prices. To improve long term resilience, India must expand and modernize its transmission infrastructure, expand battery storage and electrify the transport sector in order to withstand future climate and geopolitical shocks.
