The diversification is also aimed at reducing New Delhi’s overdependence on Gulf suppliers, a key vulnerability during regional flare-ups.“Indian PSU oil companies have successfully concluded a one-year deal for imports of around 2.2 million tonnes per annum (MTPA) LPG, close to 10% of our annual imports — for the contract year 2026, to be sourced from the US Gulf Coast — the first structured contract of US LPG for the Indian market,” oil minister Hardeep Puri said on Monday.India imports two-thirds of the LPG it consumes, relying on Gulf suppliers, mainly Saudi Arabia, the UAE and Qatar, for more than 90% of those imports.LPG is a mix of propane and butane and used in India predominantly for cooking.“The risk of relying on a single region has long been clear, but the flare-up in June between Iran, Israel and the US finally pushed companies to seek alternatives,” said an industry executive.IndianOil, Hindustan Petroleum , and Bharat Petroleum will buy LPG priced off Mont Belvieu, the key US spot benchmark. Lower Gulf freight has historically kept India tied to the region.The new deal gives US suppliers the option to ship one in every four cargoes from any other country, offering flexibility if American cargoes turn uneconomic, an industry executive said.The arbitrage hinges on the spread between Mont Belvieu and Saudi CP. As the US-China trade war crimps Chinese intake, Washington is seeking alternative buyers.India, facing US pressure to rebalance trade, committed in February to sharply boost energy purchases from the US by $10 billion to $25 billion.Saudi, anticipating increased US volumes to India and other Asian markets, has already cut CP prices to its lowest level in November since August 2023.LPG consumption in India has more than doubled in a decade to reach 3.3 million households, making any supply disruption politically sensitive.
Author: ET Bureau
Published at: 2025-11-17 22:31:00
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