Key Takeaways:
- U.S. supplies over 40% of India’s LNG demand in May
- U.S. LPG exports reach 6,30,000 tonnes, exceed Gulf supply
- U.S. gas exports to India rise 8x from pre-conflict levels
The United States has become India’s largest supplier of liquefied natural gas and liquefied petroleum gas, as disruptions in the Strait of Hormuz have significantly reduced energy shipments from Gulf nations since Feb. 28.
Rising U.S. Share In India’s Energy Imports
India depends heavily on the Strait of Hormuz, importing about 60% of its LNG and nearly all of its LPG through this route. Since late February, vessel movement through the strait has slowed, forcing a sharp shift in sourcing patterns.
In May, the United States supplied 6,30,000 tonnes of liquefied natural gas to India. This was about 60% higher than the 3,80,000 tonnes received from all Gulf countries combined during the same period. LNG imports from the U.S. also rose sharply, reaching 9,00,000 tonnes in May. This accounted for more than 40% of India’s total LNG requirement.
The increase marks a steep rise from April levels, with LNG volumes from the U.S. tripling in just one month. Overall, American gas exports to India have grown eightfold compared to pre-conflict levels, reflecting a rapid adjustment in trade flows.
Supply Shift Reshapes Cost And Sourcing Dynamics
Before these disruptions, U.S. gas struggled to compete in India due to higher freight costs. Gulf suppliers traditionally offered lower landed costs, making them the preferred source for Indian buyers.
The current supply constraints have changed that equation. With reduced availability from the Gulf, India has turned to the U.S. despite higher import costs. This shift highlights the importance of supply security over pricing in the current environment.
Liquefied natural gas remains a key fuel for Indian households, widely used for cooking. This makes its availability and pricing critical for domestic consumption patterns. At the same time, LNG plays a growing role in industrial energy use and power generation.
India is currently the world’s third-largest crude oil importer, fourth-largest LNG importer, and second-largest liquefied natural gas importer. The scale of demand means even small disruptions can lead to significant sourcing changes.
Looking ahead, the focus is expected to move further toward gas imports from the U.S. Strong production capacity from shale resources and expanding export infrastructure position the U.S. as a reliable supplier in the near term.
The shift also reflects India’s broader push to diversify energy sources. With supply routes facing uncertainty, securing stable and consistent imports has become a priority for businesses that depend on energy inputs.
At the same time, the rise in imports has contributed to a higher overall energy bill. This has added pressure on the Indian rupee against the dollar in recent months, reflecting the financial impact of increased reliance on costlier imports.
The current trend signals a structural change in India’s energy sourcing strategy, driven by availability, scale, and the need to maintain an uninterrupted supply across sectors.
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