The Petroleum and Natural Gas Minister stated last week that 67 percent of India’s liquefied petroleum gas now originates from the United States. Although no specific period was cited for this development, it marks a major change from an earlier plan to obtain roughly 10 percent of cooking gas from that country. To manage supply challenges, India, the world’s second-largest LPG importer, began purchases from the United States under a long-term agreement for 2.2 million tonnes by 2026 through state oil companies. Precise contract prices per tonne or delivered costs remain undisclosed. This heavy dependence on American supplies highlights efforts to diversify sources amid tensions in the Strait of Hormuz, indicating that India’s LPG security should not rely on one region. Data from Vortexa show Indian LPG imports from West Asia dropped nearly 85 percent from February to June 2026. The shortfall was partly met by higher volumes from the United States, reaching 0.77 million metric tonnes in June, a 19.4 percent rise from May. According to the Petroleum Planning and Analysis Cell, total LPG imports in the first quarter of 2026 totaled 2.85 million tonnes, worth $2,328 million. Excessive reliance on any single supplier carries risks, and greater dependence on a country that views partnerships mainly through national interest could lead to energy being used as leverage in trade discussions. Such import dependence also complicates monetary policy. The United States has applied financial sanctions, export controls, and technology restrictions as foreign policy instruments in various nations. Even in ongoing commercial relations, it can affect transactions involving third countries, as seen in proposed legislation targeting buyers of Russian energy. Analysts note that Washington gained from Europe’s move to American liquefied natural gas following the Russia-Ukraine conflict, with energy exports advancing during geopolitical tensions. Unlike West Asian deliveries, which often use long-term contracts, U.S. supplies may be influenced by trade or other priorities, increasing exposure. India, which meets about 60 percent of its LPG needs through imports with nearly 90 percent transiting the Strait of Hormuz, could lose proximity-based pricing advantages, as voyages from the United States take 25 to 35 days versus 5 to 10 days from the Gulf. Although U.S. LPG may appear competitive at the source, West Asian product is typically cheaper upon arrival due to shorter distances, though recent geopolitical factors have altered this temporarily. For India, cooking gas is a politically sensitive commodity whose availability takes precedence over cost considerations. Disruptions in the Strait of Hormuz have driven Gulf LPG prices up sharply, with Saudi contract prices rising about 46 percent from February to June. In such conditions, even higher-cost U.S. cargoes become viable due to availability and lower supply risk. Elevated Gulf benchmarks, shipping issues, and risk premiums can render American LPG competitive despite longer transit times. While India has reduced Hormuz exposure, it now faces greater commodity price, currency, and freight risks. Persistent U.S. inflation could keep interest rates elevated, strengthening the dollar and raising the rupee cost of imports. If domestic LPG prices are capped amid rising global prices and a weaker rupee, oil companies’ under-recoveries grow, creating further fiscal and external pressures. The government has reported that accumulated under-recoveries for public sector oil marketing companies exceeded 59,000 crore rupees as of July 31.
