Persistent disruptions in the Strait of Hormuz (SoH) severely mauled India’s liquefied petroleum gas (LPG) supply chains forcing the world’s second largest consumer to tap the U S, which supplied almost 75 per cent of the country’s import of the key cooking fuel in August.
Washington, which was India’s fifth largest LPG supplier till January 2026, jumped a spot to become the fourth largest, replacing Kuwait a month later. Fresh conflict in West Asia (from February 28) propelled the North American country to become the top supplier for five consecutive months, beginning March.
India imported about 0.62 million tonnes (mt) of LPG from the US in August, after bringing in 0.89 mt in July, OPEC said on Friday.
“The US accounted for more than 73 per cent of India’s LPG imports during August. Importing from the US is part of a wider supply-side strategy to ease supply bottlenecks imposed by ongoing geopolitical tensions curtailing LPG supply to the country,” it added.
However, this diversification has come at a cost.
The US LPG is linked to Mont Belvieu prices ($0.68 per gallon in August 2026, equivalent to around $360 per tonne) which is generally benched lower than Saudi CP, but longer voyages to India raises its delivered cost, Equirus Securities pointed out.
“Houston–Asia VLGC freight exceeded $200 per tonne mark in mid-April 2026 and continued to rise to around $300 in August as stronger eastbound demand tightened vessel availability. Consequently, US-to-Asia LPG flows declined from around 4.8 mt in July to roughly 4.2 mt in August and are estimated to fall further to 3.6 mt in September,” the brokerage added.
Meanwhile, constrained regional supply pushed Saudi Arabia’s September propane contract price up by $5 per tonne to $625. Higher sourcing costs are expected to continue to accumulate with Indian oil marketing companies (OMCs), it noted.
The world’s largest crude oil exporting bloc pointed out that India’s LPG consumption was subdued due to supply constraints stemming from West Asia disruptions. Besides, industrial and commercial users shifted to piped natural gas (PNG) as an alternative after the government capped the use of LPG in these areas.
LPG supply diversification
Prior to the outbreak of conflict in West Asia in February 2026, India used to import about 60 per cent of its LPG consumption, out of which about 90 percent was transiting the SoH. With its closure supplies of imported LPG were severely constrained.
Before the Hormuz disruption, West Asia supplied more than 90 per cent of India’s LPG imports. Washington’s share increased from 8 per cent in February 2026 to 16 per cent and 32 per cent in March and April, respectively, Equirus said.
As of early August, the US accounted for 65–70 per cent of the total LPG imports. US supplies reached 0.89 mt in July 2026 and 0.62 mt in August, accounting for more than 70 per cent of India’s combined imports during the two months, the brokerage added.
“Shift primarily reflects loss of Gulf supplies. UAE deliveries fell to around 0.14 mt in August, Qatar supplied only around 0.06 mt and Saudi Arabia supplied no LPG during July–August. The US volume in July alone was approximately equal to UAE’s record monthly supply of 0.89 mt in October 2025,” Equirus pointed out.
Imports from Algeria began in June and were expected to reach around 0.11 mt in August. Indian Oil Corporation (IOC) has finalised a 2027 agreement with Sonatrach for one 45–55 (kilo tonne) kt cargo per month, equivalent to around 0.5–0.7 mt annually, it said.