India Increases US LPG Imports to Reduce Middle East Reliance

The Government of India is shifting its energy procurement strategy to source more liquefied petroleum gas (LPG) from the United States, aiming to reduce a historical reliance on the Middle East that previously accounted for over 90% of imports. This strategic pivot follows severe fuel shortages caused by the US-Israeli war on Iran, which began in February 2026 and disrupted critical flows through the Strait of Hormuz.

State-owned refiners Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp are increasing US imports by more than 25% through annual contracts for 2027. The government has directed these refiners to ensure at least 15% of 2027 LPG imports come from US term contracts, up from 10% this year. Contracted volumes are expected to rise to approximately 2.76 million tons, with refiners seeking up to five 46,000-ton cargoes per month.

Beyond energy security, the move serves a diplomatic purpose by narrowing India's trade surplus with Washington, a key demand of President Donald Trump. India has pledged to increase US energy purchases by $10 billion to $25 billion to facilitate a pending trade deal. Junior Oil Minister Suresh Gopi stated that the diversification is intended to ensure supply security and mitigate risks from geopolitical disruptions. The shift comes as the US has already become India's top LPG supplier, with record shipments of 3.9 million tons recorded through August 2026.