India Doubles Down on American Gas

Turning Away From the Gulf

Report By Y-Trendz

New Delhi/Washington — India is rapidly reshaping the map of its energy imports, sharply increasing purchases of American natural gas and liquefied petroleum gas while stepping back from decades-long

reliance on Gulf suppliers. The shift, accelerated by conflict in the Middle East and sustained diplomatic pressure from Washington, marks one of the most significant realignments in India's energy strategy in years.

US Emerges as Top Supplier

The United States supplied 630,000 tonnes of LPG to India in May, roughly 60% more than the 380,000 tonnes the country received from all Gulf countries combined, according to data from commodities intelligence firm. The disruption stemmed from the war in the Middle East, which cut India off from its traditional Gulf exporters just as the country imports roughly 60% of its liquefied natural gas and almost all of its LPG through the Strait of Hormuz.

The numbers on the gas side are even more dramatic. American LNG exports to India reached 900,000 tonnes in May, accounting for more than 40% of the country's total requirement — a threefold jump from April alone.

While the Iran conflict forced the immediate shift, analysts say it merely accelerated a trend already underway. Sumit Ritolia, lead research analyst at Kpler, said that going forward, India-US energy trade will increasingly center on gas, with America's abundant shale resources and expanding export infrastructure uniquely positioning it to meet India's need to diversify supply.

A Costly but Necessary Pivot

The switch isn't cheap. Importing LNG from the US costs more than sourcing it from the Gulf, but India has few alternatives left, according to Bineet Banka, an energy equity analyst at Nomura in India.He also noted that Washington wants India to shrink its trade surplus with the US, and higher energy imports may be the most effective route to achieve that. Compounding the pressure, the Indian rupee has weakened against the dollar since the Iran war began, partly because of the country's rising energy import bill. India remains the world's third-largest crude importer, fourth-largest LNG importer, and second-largest LPG importer.

Before the war, freight costs kept American cargoes largely uncompetitive in the Indian market. Manish Sejwal of Rystad Energy noted that Middle Eastern LPG had consistently beaten US cargoes on landed cost, limiting Washington's ability to gain market share — until India was cut off from the Gulf and became more receptive to US shipments. Sejwal projected that by the end of June, US LPG supply to India would likely exceed one million tonnes, a fuel that matters politically in India since LPG is primarily used as household cooking gas and its pricing is closely watched by authorities protecting consumers from global price swings. A Nomura report cited by CNBC described the United States as the biggest beneficiary of India's changing gas-sourcing pattern.

Deals Cementing the Shift

The realignment isn't just a wartime accident — it's being locked in through formal contracts. Indian state refiners Indian Oil, Bharat Petroleum, and Hindustan Petroleum jointly awarded their first-ever long-term US LPG import deal to Chevron, Phillips 66, and Total Energies Trading, covering around 2 million metric tons — roughly 48 very large gas carrier cargoes — for delivery beginning in 2026.India currently imports about 65% of its LPG consumption, some 31 million tons annually, almost entirely from Middle Eastern suppliers such as Saudi Arabia.

The broader trade relationship provides context for the energy push. During Prime Minister Narendra Modi's visit to Washington in February, India pledged to raise US energy purchases from $10 billion to $25 billion, with both countries targeting $500 billion in bilateral trade by 2030. That commitment has unfolded against a tense tariff backdrop: India's trade surplus with the US has been a persistent irritant for President Trump, who imposed a 50% tariff on Indian goods, with 25 percentage points specifically tied to penalizing New Delhi's continued purchases of Russian oil.

Diversification Beyond Washington

Even as it leans into American supply, India isn't betting everything on the US relationship, which officials acknowledge remains unresolved on trade. In January, India signed a $3 billion, 10-year LNG agreement with UAE's ADNOC to supply Hindustan Petroleum starting in 2028, alongside a pledge to double bilateral trade with the UAE to $200 billion by 2032 — a hedge as a broader deal with Washington remains elusive. India has also struck trade pacts with the UK and Oman, with a New Zealand agreement expected in the first half of 2026.

Together, the moves suggest India is pursuing a dual-track strategy: satisfying Washington's push for larger energy purchases and a smaller trade surplus, while simultaneously insuring itself against overdependence on any single supplier — American or Gulf — in an increasingly volatile geopolitical landscape.