India is poised to significantly increase its reliance on the United States for liquefied petroleum gas (LPG) imports, with plans to source up to a quarter of its total LPG needs from the US by 2027. This strategic move is intended to reduce the nation's heavy dependence on Middle Eastern suppliers and to bolster ongoing efforts to finalize a comprehensive trade deal with Washington.
As the world's third-largest oil importer and consumer, India historically sourced approximately 90% of its 21.85 million metric tonnes of LPG imports from the Middle East in 2025. The decision to diversify comes after India experienced its most severe LPG shortage earlier this year, triggered by the Iran war and the subsequent closure of the Strait of Hormuz, which severely disrupted established supply routes.
New Sourcing Plans Underway
To facilitate this shift, state-owned refiners, including Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp, are expected to issue tenders for US LPG supplies for 2027 within the next one to two months. Furthermore, a delegation from these companies is reportedly planning a visit to the United States next month to discuss sourcing logistics and agreements directly.
Boosting Bilateral Trade and Energy Ties
This increase in US energy purchases is also anticipated to help narrow India's trade surplus with Washington, a key demand from the US administration. New Delhi is actively working towards concluding a long-awaited trade agreement with the United States within the next three to four months, with both nations targeting $500 billion in bilateral trade by 2030. India has already committed to increasing its US energy purchases by an additional $10 billion to $25 billion in the near future.
Current Trends and Future Outlook
India has already begun stepping up spot purchases from the US and other suppliers to compensate for reduced Middle Eastern deliveries. US LPG imports surpassed 1 million tonnes in June for the first time and are projected to exceed India's initial 2026 annual contract target of 2.2 million tonnes. While India's LPG consumption saw a dip to about 14.7 million tonnes during January-June 2026—an 8% decrease from the previous year, with imports falling by 28% to approximately 7.5 million tonnes—forecasts indicate a recovery. LPG consumption is expected to reach about 31 million tonnes in 2027, with imports potentially rising to around 20 million tonnes to meet this demand.