India turns to US for LPG as West Asia disruptions tighten global supply

India is increasingly pivoting towards the United States as an alternative source for liquefied petroleum gas (LPG) amid supply disruptions in West Asia, according to a recent note by S&P Global Energy.

The shift comes as ongoing tensions in the region have choked crude oil and gas supplies passing through the Strait of Hormuz, a critical transit route for global energy shipments.

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Analysts noted that the global LPG market is currently facing a shortage of cargoes, as disruptions in West Asia, which accounts for nearly 30 per cent of global LPG supply, have squeezed the spot cargo pool and tightened overall availability.

India, which meets around 41 per cent of its LPG demand through domestic production, relies heavily on imports for the remaining requirement.

Traditionally, the Gulf region has been a key supplier, contributing nearly 60 per cent of India’s LPG consumption. However, with supply constraints intensifying, US-origin LPG shipments to India have surged, overtaking volumes from conventional Gulf suppliers.

The disruption has also impacted shipments already en route. Government officials said that about 1.67 million tonnes of crude oil, 3.2 lakh tonnes of LPG, and nearly 2 lakh tonnes of liquefied natural gas (LNG) are currently stuck aboard 22 Indian-flagged vessels stranded in the Persian Gulf, awaiting clearance to pass through the Strait of Hormuz.

Despite the bottleneck, two state-owned very large gas carriers (VLGCs) – Shivalik and Nanda Devi – successfully navigated the passage earlier this week, delivering a combined cargo of over 92,000 metric tonnes of LPG to Indian shores, providing some relief to domestic supplies.

In a strategic move to diversify sourcing, Indian oil marketing companies have secured a term contract for 2.2 million metric tonnes of US-origin LPG for 2026, translating to roughly four VLGC shipments per month. In the first two months of the year alone, India imported nearly 480,000 metric tonnes of LPG from the US, equivalent to around 11 VLGC cargoes.

Recent data highlights the shifting import pattern. India’s weekly LPG imports declined to 265,000 metric tonnes in the week ending March 19, down from 322,000 metric tonnes on March 5. Notably, inflows from West Asia dropped sharply to 89,000 metric tonnes during the period, accounting for just 34 per cent of total imports — the lowest share since January.

In contrast, supplies from alternative regions rose to 176,000 metric tonnes during the same week, up from zero in the previous week, when West Asia accounted for the entire import basket. The evolving supply dynamics underscore India’s efforts to mitigate risks arising from geopolitical disruptions and ensure continuity in energy supplies for its domestic market.