India's LPG shortage fuels California gasoline price surge

Disruption of oil shipments through the Strait of Hormuz amid the U.S.-Israeli war with Iran has cut roughly one‑fifth of global oil flow, creating the worst‑ever energy supply crisis. India, which imports more than 90% of its liquefied petroleum gas (LPG) from the Middle East, faces severe cooking‑gas shortages. New Delhi has ordered refiners to prioritize LPG output, reducing production of alkylates – a key additive for gasoline.

Alkylates are essential for California’s unique clean‑burn gasoline blend, and the cut in Indian alkylate exports has tightened the state’s fuel market. Prices in California have risen to about $6.14 per gallon, with analysts warning they could exceed $6.50 as summer demand spikes. Mason Hamilton of the American Petroleum Institute said, “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.” GasBuddy analyst Patrick De Haan added, “The more acute the alkylate supply shortfall becomes, the higher it could push prices in California.”

California officials say the state has sufficient gasoline and blending components but are monitoring the situation, while India’s LPG shortage has led to long queues for cylinders and threatens restaurant operations.