Key Takeaways:
India's pivot toward American liquefied petroleum gas marks the biggest shift in its energy sourcing strategy in decades, driven by war-induced supply disruptions and the imperative to seal a trade deal with Washington.
India plans to buy up to a quarter of its liquefied petroleum gas imports from the United States in 2027, a move that would cut its reliance on the Middle East and support efforts to secure a trade deal with Washington, three sources with knowledge of the matter said.
"The diversification of LPG imports is being pursued to ensure supply security and mitigate risks arising from regional disruptions or geopolitical events," Suresh Gopi, India's junior oil minister, told lawmakers Monday.
The world's third-biggest oil importer bought about 90% of its 21.85 million metric tons of LPG imports from the Middle East in 2025. Imports accounted for roughly 66% of India's LPG consumption, government data show. State refiners Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum are expected to issue tenders within one to two months for US LPG supplies in 2027, the sources said, adding a delegation from the companies is also likely to travel to the United States next month to discuss sourcing.
New Delhi faced its worst LPG shortage earlier this year after the Iran war and closure of the Strait of Hormuz disrupted supplies. The government invoked emergency measures to divert petrochemical feedstocks from industry to households, which use LPG as cooking gas. Lower supplies from the Middle East curtailed India's LPG consumption to about 14.7 million tons in January-June 2026, down about 8% from a year earlier, while imports fell about 28% to roughly 7.5 million tons, provisional government data show. This year, India's LPG consumption is expected to decline to 30 million tons due to low supplies, one of the sources said.
The US pivot carries a trade dimension as large as the energy one
Higher US energy purchases could help India narrow its trade surplus with Washington, a key demand from President Donald Trump, as New Delhi pushes to complete a long-awaited trade deal within the next three to four months. India has pledged to increase US energy purchases by $10 billion to $25 billion in the near future, and the two nations have agreed to target $500 billion in bilateral trade by 2030.
New Delhi has already accelerated spot purchases from the United States and other suppliers to offset reduced Middle East supplies. US LPG imports topped 1 million tons in June for the first time and are likely to exceed India's initial 2026 annual-contract target of 2.2 million tons, the sources said. India's crude oil import bill surged 60% to $49.8 billion in the first quarter of fiscal year 2027, according to data from Mint, as the country meets 85% of its energy requirements through imports.
LPG imports could rise to about 20 million tons in 2027 as demand recovers to around 31 million tons, one of the sources said. The shift toward US supply would represent a structural change in India's energy architecture, reducing its vulnerability to chokepoint disruptions after the Strait of Hormuz closure demonstrated how quickly Middle East dependence can become a national security liability. For US LPG producers and exporters, the Indian pivot opens a significant new demand channel at a time when global LPG markets are seeking diversification away from traditional Asian buyers.
This article is for informational purposes only and does not constitute investment advice.
