India's IOC Seeks LNG Cargo for March Delivery as Iran War Chokes Hormuz Supply Routes

India's energy supply chain is under its most severe stress in years. Indian Oil Corporation (IOC) — India's largest state-run refiner — has issued a tender seeking a spot LNG cargo for March delivery, as the US-Iran war effectively chokes the Strait of Hormuz and forces one of the world's largest LNG consumers to scramble for alternative supplies at record-high spot prices. With Qatar's LNG production halted and 1.056 million tonnes of LNG trapped in Gulf waters, India is racing against the clock.

The Emergency Tender: What IOC Is Seeking

IOC's spot LNG tender for March delivery is a direct response to the supply emergency triggered by the US-Israel strikes on Iran that began on February 28, 2026. The tender targets delivery to India's key import terminals — primarily Dahej on the west coast, operated by Petronet LNG — as the company scrambles to replace supplies that can no longer flow through the now-disrupted Strait of Hormuz.

IOC is not alone. State-run gas distributor GAIL has also issued a tender seeking one LNG cargo for delivery between March 15 and March 25, with the tender closing on March 9 — reflecting the urgency of India's supply crisis. Together, these simultaneous tenders from IOC and GAIL represent an extraordinary moment of emergency procurement by India's state energy machinery — a signal of how serious the supply situation has become. For real-time LNG market coverage, Reuters Commodities is tracking all India LNG tender activity as this crisis unfolds.

Why India Is in Crisis: The Three Supply Shocks

1. Qatar LNG Production Halt

India's state-controlled Petronet LNG issued a force majeure note to its offtakers — including GAIL, IOC, and BPCL — on March 3, 2026, after receiving a notice indicating a potential event of force majeure from upstream firm QatarEnergy (QE) of its 77 million tonne/year Ras Laffan LNG export terminal. Qatar is the world's second-largest LNG producer — and its Ras Laffan complex supplies a critical portion of India's contracted LNG volumes. The force majeure notification triggered a chain reaction of supply uncertainty across India's entire gas distribution network.

2. Strait of Hormuz Effectively Closed

Most vessel owners are unwilling to transit the Strait of Hormuz — a key chokepoint for oil and LNG exports from the Mideast Gulf — forcing some upstream production offline. Argus data from ship-tracking firm Kpler showed approximately 1.056 million tonnes of LNG loaded onto 13 vessels trapped in the Mideast Gulf west of Hormuz as of March 3, 2026 — with three empty vessels also potentially ready for loading whenever QatarEnergy's production restarts.

3. Spot Prices Surging Past $23/MMBtu

The Argus-assessed prices for LNG deliveries to west India for first-half April rose to $23.3/MMBtu and east India to $23.5/MMBtu on March 4 — higher by $7.8–7.9/MMBtu from the previous session alone. Earlier tenders issued by GAIL and GSPC for March delivery received offers of over $25/MMBtu at India's west coast — but were ultimately not awarded due to the prohibitive price levels, with available March deliveries on water remaining extremely limited.

India's Supply Diversification Response

A senior government official confirmed that Indian companies are actively buying LNG from outside the Mideast Gulf: "A company bought a cargo just yesterday. We are comfortably placed. Crude oil continues to flow. Even before the conflict broke out on February 28, 55% of our sourcing was from non-Strait countries — which will now go up."

India has also secured a deal for public sector oil companies to import approximately 2.2 million tonnes of LPG from the US Gulf Coast in 2026 — roughly 10% of the country's annual LPG imports — in a move to diversify energy sources and bolster energy security. Additionally, Russian oil being made available after a US waiver for one month will further augment India's supply position.

The government also invoked emergency powers under the Essential Commodities Act to order all oil refiners to maximise LPG output and make all propane and butane streams available exclusively to the three public sector oil marketing companies — IOC, BPCL, and HPCL — for domestic household cooking use, barring their use in petrochemical production.

The Bigger Picture: How Much Gas Does India Need?

India consumes about 195 million standard cubic metres of natural gas daily — for generating electricity, producing fertilisers, CNG for automobiles, piped cooking gas, and industrial feedstock in sectors ranging from steel to ceramics. Roughly half of this is imported as LNG.

India may have only up to 10 days of LPG stocks to cover demand, and the country is scrambling for cargoes outside the Mideast Gulf as the Iran-US conflict has effectively dried up exports from the region. Market participants warn that India's industrial clusters could soon run out of gas supply, as the availability of competing fuel propane also remains under serious pressure.

For comprehensive tracking of India's LNG import dependency and global market dynamics, the International Energy Agency's Natural Gas Market page and Argus Media LNG provide the most authoritative real-time data.

IOC's Long-Term LNG Strategy: Contracts Already in Place

The current emergency spot procurement should be seen in the context of IOC's broader long-term LNG supply strategy. IOC has recently secured several long-term contracts, notably with ADNOC Gas, TotalEnergies, and Trafigura, totalling more than 5 million tonnes per year from 2026. However, approximately 40% of India's projected 2030 LNG demand remains uncontracted — making spot procurement strategically necessary even in normal times, and critically urgent in an emergency.

IOC's approach reflects India's role as a "price-sensitive swing buyer" in global LNG markets — capable of supporting demand in times of oversupply and retreating quickly when prices rise. The current crisis, however, has removed that flexibility entirely — forcing IOC to procure at any available price to maintain domestic supply security.

Key Facts at a Glance

• IOC Tender: Spot LNG cargo for March delivery (Dahej terminal)
• GAIL Tender: One LNG cargo, March 15–25 delivery, tender closing March 9
• Petronet Force Majeure Issued: March 3, 2026
• QatarEnergy Force Majeure: Ras Laffan 77 mtpa LNG terminal affected
• LNG Trapped in Gulf (Kpler data): ~1.056 million tonnes across 13 vessels
• India LNG Spot Price (W. Coast, April H1): $23.3/MMBtu (+$7.9 in one session)
• March Offers Received (GAIL/GSPC tender): Over $25/MMBtu — not awarded
• India Daily Gas Consumption: ~195 million standard cubic metres
• India's Import Dependency: ~50% of total gas consumption imported as LNG
• India LPG Stock Buffer: Up to 10 days
• Non-Strait Sourcing (Pre-Conflict): 55% — rising further post-conflict
• IOC Long-Term Contracts: ADNOC Gas + TotalEnergies + Trafigura = 5 mtpa from 2026
• US LPG Contract (2026): 2.2 million tonnes from US Gulf Coast secured

Conclusion

India's IOC emergency LNG tender for March delivery is a stark illustration of how quickly the US-Iran war has disrupted Asia's most price-sensitive LNG buyer. With Qatar's Ras Laffan terminal under force majeure, 1 million tonnes of LNG stranded in the Gulf, and spot prices surging past $23/MMBtu from $15 in a matter of days, India's energy security challenge has shifted from long-term planning to immediate crisis management.

The government's multi-pronged response — emergency domestic LPG production orders, US LPG contracts, Russian oil waivers, and aggressive spot LNG procurement — reflects a state energy apparatus operating at full emergency capacity. The critical question is whether these alternative supply channels can fill the gap fast enough to prevent industrial disruptions and keep household cooking gas flowing to India's 33 crore LPG consumers.

Follow live updates on India's LNG supply crisis from Reuters Commodities, The Economic Times Energy, and Business Standard for the most current procurement and pricing developments.

Disclaimer: This blog post is for informational purposes only and does not constitute investment or trading advice.