India's energy security recently saw a glimmer of hope as two more large tankers carrying liquefied petroleum gas (LPG) successfully navigated the tense Strait of Hormuz.
This passage is significant because the strait, a critical chokepoint for global energy, has become a high-risk zone. Since late February 2026, Iran's threats to close the waterway have created a perilous environment for shipping. This brings us to the first link in the causal chain: the risk itself. The perceived danger led maritime insurers to cancel or drastically increase their 'war-risk premiums,' the extra insurance needed to cover vessels in conflict zones.
Secondly, this insurance shock had an immediate effect. Premiums surged from around 0.2% to as high as 1% of a ship's value, adding millions of dollars to the cost of a single voyage. Consequently, many shipping operators decided the risk and cost were too high, halting voluntary transits. This created a massive traffic jam, with dozens of ships, including at least six Indian-flagged LPG carriers with about 300,000 metric tons of fuel, stranded outside the strait.
Thirdly, this created immense pressure within India. The country depends on imports for over 66% of its LPG, which is the primary cooking fuel for millions of households. To prevent a domestic shortage and social unrest, the Indian government invoked the Essential Commodities Act in early March. This act allowed the government to prioritize LPG distribution to homes, but it also highlighted the urgent need to unlock the stranded imports.
This urgency led to the current solution: direct diplomacy. Rather than waiting for the crisis to resolve, India began negotiating directly with Iran to secure safe passage for its ships. A precedent was set in mid-March when two other Indian tankers were allowed through. The most recent passage of the BW Tyr and BW Elm follows this template. These ships broadcast their Indian identity via their AIS system, a clear signal that their transit has been pre-arranged.
However, this relief is limited. The 90,000 tons of LPG from these two ships cover only about one day of India's national consumption. It’s a crucial step, but it only chips away at a backlog that represents several days of demand. The underlying issues of high insurance costs and geopolitical tension remain, meaning India's LPG supply chain is still vulnerable.
- Strait of Hormuz: A narrow, strategically important waterway between the Persian Gulf and the open ocean, through which a significant portion of the world's oil and gas passes.
- LPG (Liquefied Petroleum Gas): A fuel gas mixture, primarily propane and butane, used for cooking, heating, and vehicles.
- War-Risk Premium: Additional insurance coverage for ships traveling through areas with a high risk of war, terrorism, or political violence.