India’s restaurants are under threat from the LPG supply crunch caused by the Iran war

The Iran war is causing global disruption, and restaurants in India are under threat because of it.

The conflict is threatening India’s supply of liquefied petroleum gas (LPG), most of which is imported and the global supply of which is threatened by disruptions in the Strait of Hormuz.

On Tuesday, India’s Ministry of Petroleum and Natural Gas said that it was directing oil refineries to prioritize supplying LPG to the 330 million households that use it as a primary cooking fuel, over 3 million businesses that use commercial LPG cylinders.

This is causing a “crisis situation” that will lead to the closure of many restaurants over the next few days, Sagar Daryani, president of the National Restaurant Association of India, told CNBC.

He added that 90% of restaurants in India rely on LPG cylinders to run their kitchens.

The industry was already facing low demand and high costs, but if the LPG supply issues persist, it would lead to “closure of business and job losses,” Daryani said.

The NRAI represents over 500,000 restaurants across India. India’s industry generates an annual turnover of over 5.7 trillion rupees ($78.9 billion) and employs over 8 million people, per the NRAI.

On Tuesday, India’s Ministry of Petroleum and Natural Gas said in an X post that it was directing oil refineries to prioritize LPG supply to households and use imported liquefied natural gas (LNG) for essential commercial sectors such as hospitals and educational institutions.

Announcing the shifts in LPG supply, India’s Ministry of Petroleum and Natural Gas said it would form a committee to review representations for LPG supply to restaurants, hotels and other commercial industries.

The NRAI is urging the government to classify the restaurant industry as an essential service, Daryani said.

India is the world’s second-largest importer of LPG and consumed 31.3 million metric tons of it in the financial year 2025, according to a S&P Global report on Tuesday. The country can only meet 41% of this demand from its domestic LPG supply, it said.

“India imports roughly 67% of its LPG requirements, with about 90% of these imports transiting through the Strait of Hormuz,” said Manish Sejwal, senior vice president of commodity markets, oil-NGLs/LPG & Naphtha at Rystad Energy, told CNBC by email.