US supplied nearly three-fourths of India’s August LPG imports amid Hormuz disruption
India’s LPG sourcing shifted sharply from West Asia to the US after Strait of Hormuz disruption, raising freight and propane costs for oil marketers. Indian Oil has also lined up a 2027 supply arrangement with Algeria’s Sonatrach, signalling a broader diversification push.
What happened
Indian Oil Corporation · Strait of Hormuz disruptions shifted India’s LPG sourcing sharply toward the US, which supplied nearly three-fourths of August imports.
Key facts
- US supplied more than 73% of India's LPG imports in August
- India imported 0.62 million tonnes of LPG from the US in August, versus 0.89 million tonnes in July
- US LPG share rose from 8% in February 2026 to 16% in March and 32% in April
- Before the Strait of Hormuz disruption, West Asia supplied more than 90% of India's LPG imports
- India imports about 60% of its LPG consumption
- Houston-Asia VLGC freight rose to about $300 per tonne in August
- Saudi September propane contract price rose $5 per tonne to $625
- IOC's 2027 Sonatrach agreement covers 45-55 kilotonnes monthly, or 0.5-0.7 million tonnes annually
Why this matters
Indian Oil’s planned Sonatrach arrangement signals that long-term, geographically diversified LPG partnerships are becoming strategically valuable amid Hormuz-related volatility.
What to watch
- Duration and severity of Strait of Hormuz shipping disruption, including war-risk premiums and vessel availability.
- US Gulf-to-India LPG freight rates, Panama/Suez routing constraints and delivered propane price spreads versus Middle East cargoes.
- Indian domestic LPG cylinder price decisions, subsidy announcements and oil-marketing-company under-recovery disclosures.
- Monthly Indian LPG import origin data and the share sourced from the US, Algeria and Gulf producers.
- Execution details, volumes and pricing structure of IOC's Sonatrach supply arrangement.
- LPG inventory levels and distributor allocation changes ahead of seasonal demand peaks.
- Indian oil marketers are likely to increase term-contract coverage, diversify loading ports and build larger LPG inventory buffers ahead of peak household demand.
- Retail LPG price adjustments may be delayed by inflation and subsidy considerations, increasing the likelihood of under-recovery compensation or weaker downstream marketing margins.
- Distributors may face tighter cylinder allocation and higher working-capital needs if cargo arrival schedules become less predictable.
- Petrochemical and commercial LPG users could see greater pass-through than subsidized household consumers, supporting demand destruction or fuel switching at the margin.