India Mandates 15% US LPG Imports to Diversify Energy

The Government of India has directed state-owned refiners to source at least 15% of the country's 2027 liquefied petroleum gas (LPG) imports through annual term contracts with the United States. This strategic shift aims to reduce dependence on Middle Eastern supplies following severe shortages caused by the war in Iran, which disrupted fuel flows through the Strait of Hormuz.

State-owned refiners, including Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum, are currently negotiating these supply deals. The move follows a record 3.9 million tons of LPG shipments from the United States through August 2026, establishing the U.S. as India's top LPG supplier. Recent shortages have already caused a 16% year-on-year plunge in LPG consumption last month, forcing users to switch to biomass and piped natural gas.

Beyond energy security, New Delhi intends to use increased U.S. imports to narrow its trade surplus with Washington. Officials view this as a necessary step to facilitate a pending trade deal between the two nations.