Amid the escalating US-Israel-Iran conflict, supply disruptions in global energy markets are beginning to ripple into daily life in India.
In Mumbai, around 20 per cent of hotels and restaurants have already shut down due to disruptions in commercial LPG supply, the city’s hotel and restaurant association AHAR said on Tuesday.
The association warned that up to 50% of hotels could shut within the next two days if supplies do not improve. According to AHAR, the number of restaurants that remain operational will depend largely on how much LPG stock individual establishments still have available.
While LPG cylinders are commonly seen as a primary fuel source in homes and kitchens, the fuel itself is not produced directly as a standalone product.
Instead, Liquefied Petroleum Gas (LPG) is largely a byproduct of crude oil refining and natural gas processing.
HOW IS LPG PRODUCED?
Crude oil is a complex mixture of hydrocarbons that must be separated into useful fuels at oil refineries. The first step in refining is fractional distillation, where crude oil is heated to about 350-400°C inside a distillation column.
As the heated mixture rises in the column, different hydrocarbons separate based on their boiling points. The lightest gases, primarily propane and butane, rise to the top. These gases form the base components of LPG.
At normal temperatures and pressure, propane and butane exist as gases. However, when compressed under moderate pressure, they become liquid. This liquefaction allows large quantities of energy to be stored in relatively small cylinders, making LPG easy to transport and store.
WHY IS LPG CALLED A BYPRODUCT OF CRUDE OIL?
LPG is considered a byproduct because refineries are primarily designed to produce fuels such as petrol, diesel, jet fuel, and petrochemical feedstocks.
During the refining process, lighter gases like propane and butane are naturally released as secondary outputs.
Instead of being flared off or wasted, these gases are captured, purified, and compressed into LPG. A similar process occurs during natural gas extraction, where propane and butane are separated from raw natural gas streams.
WHY CAN LPG SUPPLY BECOME TIGHT?
Because LPG depends on the output of oil refining and gas production, its availability can fluctuate when global energy markets face disruptions. Geopolitical tensions, shipping delays, refinery outages, or sanctions affecting oil flows can all indirectly reduce LPG supply.
For cities like Mumbai, and Delhi, where restaurants rely heavily on commercial LPG cylinders for cooking, even short-term supply disruptions can quickly translate into business shutdowns and rising operational costs.
With tensions continuing to affect energy logistics worldwide, industry groups warn that stable fuel supply chains remain critical for keeping India’s food and hospitality sector running.
