India is buying more US LPG, but Gulf supply remains integral

India’s scramble for liquefied petroleum gas (LPG) during the Strait of Hormuz blockade briefly handed the US an unusual distinction — it became the country’s largest supplier of the cooking fuel, but analysts say Gulf exporters have little reason to panic.

During the Iran war, Indian refiners increased spot buying from the US, Australia, Chile, and even China to ensure supplies continued to flow.

“There are simply not many alternatives,” Nikhil Dubey, lead analyst for refining at Kpler, tells EnterpriseAM. The US is the world’s largest LPG exporter, while the Middle East remains the second-largest exporting region. Even if India wants to diversify, moving meaningfully away from Gulf supplies is constrained by the limited scale available elsewhere, Dubey says.

A record month for the US: India’s imports of US LPG hit 773.8k tons in June. That compares with 648k tons imported from the US in May.

The shift gathered pace in March, when the US overtook the UAE, Saudi Arabia, and Qatar as India’s largest single LPG supplier, shipping around 435.7k tons of LPG to India, compared with roughly 130.5k tons from Saudi Arabia, and 225.7k tons from the UAE, Kpler data shows.

The surge didn’t come out of nowhere. Even before the Hormuz disruption, Indian state-owned refiners were planning to procure about 10% of their LPG imports from the US.

By the numbers: The Gulf supplied around nine out of every 10 LPG cargoes India imported in 2025, according to Kpler. The International Energy Agency puts India’s dependence on Middle Eastern LPG at about 95%, reflecting decades of investment in shipping routes, import infrastructure, and commercial relationships built around Gulf producers.

Geography only reinforces that advantage: An LPG cargo from the Gulf reaches India’s western coast in less than a week. The same voyage from the US Gulf Coast can take more than a month, increasing freight costs, tying up vessels longer, and forcing buyers to hold larger inventories. Those logistical advantages have long tilted the economics in favor of Gulf suppliers.

“Few producers outside the Gulf can consistently supply the volumes India requires, making diversification more about improving resilience than replacing the region altogether,” Saul Kavonic, head of energy research at MST Marquee, says. India’s efforts to diversify are likely to be gradual for the same reason, he adds.

More leverage, not lower dependence

The Hormuz disruption has reminded Indian refiners of concentration risks. Even if Gulf supplies normalize, buyers are likely to retain long-term contracts with US producers while continuing to source occasional spot cargoes from other exporters whenever economics allows, Dubey argues.

For Gulf producers, this matters because India is one of the world’s fastest-growing LPG markets and one of the few major sources of incremental demand. The region is unlikely to lose India as a customer, but Indian buyers could emerge from the crisis with greater bargaining power and a broader set of supply options than they had before.

“The crisis has altered how Asian buyers think about energy security […] Gulf suppliers may have to offer incentives to Indian buyers to maintain their dominance,” Dubey says. That could prompt Gulf national oil companies to respond by offering greater contractual flexibility, expanding their downstream investments in India, or deepening strategic partnerships to make their supplies more attractive.

The bigger picture: The Gulf’s geographic advantage is unlikely to disappear. It remains India’s largest supplier of crude oil, LPG, and LNG, aided by a combination of scale, proximity, and established commercial ties. The Hormuz crisis, however, has introduced a new consideration into India’s energy procurement strategy — price will remain important, but so will dependence.