Centre Invokes Essential Commodities Act to Safeguard LPG Supply Amid Middle East Crisis

The Central government has triggered the Essential Commodities Act as LPG supply concerns rise after the Middle East crisis. Refineries and petrochemical units are now ordered to raise LPG output and shift crucial hydrocarbon streams into the LPG pool, while gas allocation rules are reshaped to shield key users across India.

Alongside the Essential Commodities Act move, the Centre has issued the Natural Gas (Supply Regulation) Order, 2026. This order lets authorities control production, allocation, diversion and consumption of natural gas. The stated aim is to secure adequate volumes and share them fairly when international supplies face disruption.

Essential Commodities Act and LPG supply priorities

Under the new framework, domestic piped natural gas, CNG for transport, LPG production and vital pipeline operations receive the highest protection. These priority segments are slated to get gas equal to 100% of their average use over the last six months, subject to operational limits at fields, terminals and pipelines.

Fertiliser plants are placed next in the priority ladder, reflecting their link to food security. These units will receive about 70% of their average gas consumption from the past six months. Industrial consumers on the national gas grid, including tea factories and manufacturing units, are assigned third priority, with supply held at roughly 80% of recent usage.

Industrial and commercial customers that draw fuel through city gas distribution networks are treated similarly to grid‑linked industries. Their gas supply is planned at around 80% of past consumption, depending on availability. At the same time, several restaurants nationwide already report LPG shortages, forcing some to stop cooking or prepare to suspend operations.

Essential Commodities Act and LPG supply impact of Middle East crisis

The conflict in the Middle East is central to the Centre’s decision. The crisis entered its third week after the killing of Iran Supreme Leader Ali Khamenei in a joint US‑Israel operation, followed by Iran’s ballistic and drone strikes on neighbouring countries, which shook regional shipping confidence.

The Ministry of Petroleum and Natural Gas assessed that liquefied natural gas movements through the Strait of Hormuz have been hit. Several suppliers invoked the force majeure clause, signalling they may not meet contracts. According to the government, this situation makes diversion of natural gas towards priority sectors necessary to keep essential services running.

To protect those sectors, gas could be redirected away from lower‑priority users, such as some petrochemical units and power plants. Refineries may also need to shoulder part of the burden. The order notes they might cut their own gas use to about 65% of average consumption recorded in the last six months, wherever operations allow.

Essential Commodities Act and LPG supply: past use and context

A pooled gas pricing system will apply to fuel diverted from non‑priority to priority sectors. This mechanism is meant to support fair prices and stable supply signals. The order further clarifies that its provisions override existing gas sale deals and other commercial contracts, if needed, so that priority segments do not face abrupt shortages.

All organisations in the natural gas chain must follow the new directions without delay. The list covers ONGC, Reliance Industries, Oil India, Vedanta, LNG terminal operators and city gas distributors, along with other entities involved in production, import, marketing, transport and distribution. They are required to adjust operations and supply plans in line with the regulation.

The Essential Commodities Act has been used in recent years for other markets too. The most recent instance came in December 2023, when the Centre applied it to contain onion prices by setting stock limits on traders, wholesalers and retailers. That step aimed to curb hoarding and cool domestic onion rates during a sharp price spike.

Together, the Essential Commodities Act measures and the Natural Gas (Supply Regulation) Order, 2026 signal an attempt to shield Indian households, transport, fertiliser output and core industries from external shocks. Authorities now rely on controlled allocation, mandatory compliance and temporary curbs on some users to manage scarce gas and LPG supplies.