India remains reliant on Middle East LPG: S&P

India remains heavily dependent on the Middle East for liquefied petroleum gas (LPG) imports, with no immediate alternative capable of fully meeting the country’s demand, according to Pulkit Agarwal of S&P Global.

Speaking at the S&P Global Energy New Delhi Energy Briefing, Agarwal said the Middle East continues to be the most reliable and practical source of LPG for India, especially after recent supply disruptions linked to tensions around the Strait of Hormuz.

He said India attempted to diversify LPG sourcing during the disruption by increasing purchases from West Africa and the United States, the world’s largest LPG producer. However, these markets could not fully replace Middle Eastern volumes because of quality differences and supply constraints.

According to Agarwal, physical limitations also restricted the amount of LPG India could import from alternate suppliers. As a result, LPG imports into India declined noticeably in recent months, putting pressure on domestic supply.

He added that the energy sector is closely monitoring the normalisation of cargo movement through the Strait of Hormuz. 

A steady restoration of LPG traffic could gradually ease supply-side stress and improve availability in the downstream market.On liquefied natural gas (LNG), Agarwal said India has greater sourcing flexibility because LNG can be imported from multiple global suppliers. 

However, elevated prices during the crisis sharply affected consumption. Landed LNG prices in India remained above $16–17 per mmBtu for most of the disruption, triggering demand destruction, he said. 

Demand is likely to recover if prices fall to around $11–12 per mmBtu, where LNG becomes more viable for price-sensitive consumers. Agarwal said the crisis once again highlighted India’s continued dependence on Middle Eastern energy supplies.