US Solidifies Dominance in LPG Supply as India Aggressively Diversifies Away from Gulf Dependence

US Solidifies Dominance in LPG Supply as India Aggressively Diversifies Away from Gulf Dependence​

The United States secured its position as India’s pre-eminent supplier of liquefied petroleum gas (LPG) in June, leading the market despite continued geopolitical instability. Imports reached 773.78 thousand metric tonnes (TMT), marking a significant surge of 19.4 percent compared to May figures, according to data from Kpler.

This strong performance highlights a strategic shift within India’s energy procurement basket. While the US is expanding its role, this move forms part of a broader national strategy aimed at reducing dependence on any single country or region for vital energy supplies.

Diversifying Energy Imports Amid Geopolitical Risks​

India's diversification drive accelerated following international tensions that emerged earlier this year. Before these conflicts intensified, approximately 90 percent of India’s LPG imports typically traversed the Strait of Hormuz, leaving the nation heavily reliant on Gulf suppliers for its energy security.

To mitigate these risks, India has begun sourcing cooking gas from the US. This expanded relationship is backed by a long-term deal commitment, securing 2.2 million tonnes for state-run refiners through 2026.

The diversification efforts are extensive. The nation is ramping up imports of both LNG and LPG from an array of new suppliers. Sourcing has expanded to include countries such as Oman, Argentina, Nigeria, Algeria, and Egypt.

Gulf Suppliers Maintain Key Role in Market​

While the US gained market share, traditional Gulf partners remain critical players in India's supply chain. The UAE was the second-largest supplier in June, with imports reaching 157 TMT—a considerable increase of 16.6 percent from 134.7 TMT reported in May.

Saudi Arabia and Kuwait also contributed substantially to Indian LPG needs, each providing 64 TMT during the month. These contributions underscore the continued importance of West Asia as a crucial energy node for India.

Market Outlook: Stability Secured Through August​

Industry sources confirm that India has successfully secured adequate supplies of both crude oil and LPG through August. This assurance comes alongside the reopening of the Strait of Hormuz, which has allowed Gulf energy flows to gradually return to the global market.

Analysts anticipate that this diversification strategy will be sustained over the long term. Refiners are expected to continue expanding their procurement basket beyond the traditional Gulf region even as the latter remains a vital supplier of crude and LPG commodities.

Gas Flows Face Slower Recovery Path​

The recovery pathway for gas flows is projected to be more complex than the stability seen in crude markets. While crude markets benefit from flexible shipping routes, existing inventories, and positioned cargoes, gas supply chains operate differently.

Official sources indicate that the restoration of stable gas flows will hinge on production assessments rather than solely on maritime route reopenings. This suggests a measured and steady recovery path for the volatile sector.

India's Global LPG Consumption Status​

Currently, India ranks as the world's second-largest importer of LPG. Approximately 60 percent of its consumption is met through imports, with the majority originating from West Asia. The nation's annual demand stands within the range of 30 to 32 million tonnes, equating to roughly 85,000 tonnes per day.