In a strategic pivot to safeguard its energy security, the Government of India has finalized its first-ever major structured contract to import Liquefied Petroleum Gas (LPG) from the United States. Announced by Petroleum Minister Hardeep Singh Puri, the one-year agreement involves three state-run oil marketing companies (OMCs)—IOCL, BPCL, and HPCL—and aims to supply approximately 2.2 million metric tonnes (mt) of cooking gas for the contract year 2026.
Breaking the Gulf Monopoly
Historically, India has relied on West Asian nations like Qatar, Saudi Arabia, and the UAE for nearly 90% of its LPG imports. However, the ongoing US-Israel-Iran conflict and the resulting naval disruptions in the Strait of Hormuz have forced a rapid diversification of sources.
- Volume: The 2.2 million tonnes represent roughly 10% of India’s annual LPG import requirement.
- Logistics: The gas will be sourced from the US Gulf Coast, with approximately 48 large gas carriers (VLGCs) expected to make the journey to Indian ports throughout 2026.
- Pricing Benchmark: For the first time, the deal is linked to the Mount Belvieu (Texas) pricing hub, moving away from traditional Middle Eastern benchmarks.
Current Supply Context: March 2026
The deal’s activation comes as India manages a “worrisome” availability gap. Data from S&P Global on March 20, 2026, shows a dramatic shift in how India’s kitchens are being fueled:
| Metric | Week Ending March 5 | Week Ending March 19 |
| Total Weekly Imports | 322,000 mt | 265,000 mt (↓ 18%) |
| West Asia Inflow | 322,000 mt | 89,000 mt (↓ 72%) |
| US/Alternative Inflow | 0 mt | 176,000 mt (↑ New Peak) |
| West Asia Share | 100% | 34% (Lowest since Jan) |
Government Measures to Shield Consumers
Despite the logistical hurdle of US shipments taking 45 days to reach India (compared to 8 days from the Gulf), the government has taken aggressive steps to prevent a domestic price shock:
- The ₹40,000 Crore Shield: In the previous fiscal year, the government absorbed a 60% surge in global prices. Ujjwala beneficiaries continued to receive cylinders at ₹500–550, even when actual costs crossed ₹1,100.
- Domestic Production Surge: Under the Essential Commodities Act, Indian refineries have been ordered to maximize LPG yields, resulting in a 28–38% increase in domestic output this month.
- Priority Allocation: Supply is being strictly prioritized for households, hospitals, and educational institutions, with commercial sectors like hotels being urged to use PNG (Piped Natural Gas) or induction cooktops.
The “Strait of Hormuz” Factor
The urgency of the US deal is underscored by the current bottleneck in the Persian Gulf. As of March 18, 2026, approximately 3.2 lakh tonnes of LPG remain stuck on 22 Indian-flagged vessels waiting for safe passage through the Strait of Hormuz. While state-owned tankers like the Shivalik and Nanda Devi recently made successful transits under diplomatic cover, the US deal provides a vital “Plan B” that bypasses the volatile region entirely.
