India's LPG imports from the US are expected to reach a record 1 million metric tons in June 2026, as the country continues to offset supply disruptions from West Asia caused by the closure of the Strait of Hormuz. According to Reuters and Kpler data, imports of liquefied petroleum gas (LPG) from the US are set to surpass 1 million metric tonnes this month, marking a record high and reflecting a sharp shift in sourcing patterns for the country's cooking fuel requirements. The closure of the waterway has accelerated spot buying from the US, with Indian refiners purchasing unprecedented volumes at hefty spot market premiums as the government's priority was to maintain uninterrupted cooking gas supplies. India imported 648,300 tons of LPG from the US and 134,700 tons from the UAE in May, with Kpler's preliminary June data indicating 1.07 million tons from the US, around 223,800 from the UAE, 116,200 tons from Iran and 108,600 tons from Kuwait. Before the US-Israel conflict with Iran and the disruption of shipping through the Strait of Hormuz, India relied on Middle Eastern producers for around 90% of its LPG imports, which average about 2 million tonnes per month.
The US has emerged as India's dominant LPG supplier, accounting for nearly 65% of total imports in June 2026. According to Kpler data assessed by NDTV Profit, US cargoes have reached about 635,000 tonnes so far this month, demonstrating the country's strategic shift toward American suppliers. The US has remained India's largest LPG supplier since March, as geopolitical tensions and disruptions in West Asia reshaped trade flows and prompted buyers to seek alternative sources. This represents a fundamental change from India's traditional reliance on Middle Eastern producers, with the geopolitical tensions creating unprecedented opportunities for American suppliers to capture market share in India's LPG import portfolio.
Oil marketing companies have incurred ₹22,000 crore in LPG under-recoveries during March-May 2026, according to ratings agency Crisil. The crisis stems from higher global LPG prices driven by the ongoing West Asia conflict, while retail rates for household consumers remained below market levels. As reported by Crisil, the domestic segment accounts for 87% of total consumption, making the under-recoveries particularly significant for OMCs. The calibrated increase in retail prices helped moderate cooking fuel inflation for households but sharply widened underrecoveries for oil marketing companies. The limited increase in household cooking gas prices led to a sharp rise in under-recoveries as procurement costs outpaced retail prices. The price of a 14.2-kg household LPG cylinder in Delhi rose about 10% between February and June, while the price of a 19-kg commercial cylinder surged more than 79%. Latest data from Q4FY26 concall commentary shows OMCs reported LPG under-recoveries in the range of ₹610-670 per cylinder in May 2026 versus approximately ₹170 per cylinder in April 2026.
The price differential between domestic and commercial LPG segments has widened significantly. According to Crisil's report, while the price of a 14.2-kg domestic cylinder in Delhi increased around 10% from February to June — from ₹853 to ₹942 per cylinder — commercial LPG prices rose more than 79%, from ₹1,741 to ₹3,114 per 19-kg cylinder. In Delhi specifically, under-recoveries rose to ₹651 per domestic cylinder in May 2026 compared with full pass-through for commercial cylinders. While commercial LPG prices adjusted rapidly to market conditions, the pass-through to household consumers was limited, with a portion of the increase in procurement costs absorbed by OMCs. The relatively modest increase in household cooking gas prices resulted in higher under-recoveries for oil marketing companies as procurement costs rose faster than retail prices. Latest data from Q4FY26 concall commentary shows OMCs reported LPG under-recoveries in the range of ₹610-670 per cylinder in May 2026 versus approximately ₹170 per cylinder in April 2026.
The West Asia conflict has fundamentally altered India's LPG import sourcing strategy. As reported by Reuters, even before the disruption, India had planned to increase purchases of US LPG to around 10% of its total imports as part of efforts to rebalance trade ties with Washington. However, the uncertainty surrounding Middle Eastern supplies accelerated spot purchases from the United States. Imports of LPG fell sharply to 696,000 tonnes in April following the disruption, but recovered to 1.15 million tonnes in May as refiners stepped up purchases from alternative sources. To manage supply concerns, India also asked refiners to maximise LPG production, prioritised household LPG sales and accelerated the expansion of piped natural gas connections. These measures can help in reducing LPG consumption by 15% to 20%. While US shipments have surged, supplies from traditional Middle Eastern exporters have begun to recover gradually. India is expected to receive around 300,000 to 400,000 tonnes of LPG from the United Arab Emirates in June, with the UAE reportedly offering cargoes loaded from Oman's Sohar port at premiums of about $100 per tonne above Saudi Contract Prices (CP). Indian refiners are also expected to receive about 45,000 tonnes of LPG from Kuwait this month.
As per Kpler's analysis, crude and LPG imports have proven relatively resilient throughout the disruption, unlike LPG, which has been the most severely affected. India's LPG consumption declined 13% year-on-year in both March and April, before falling 20% in May as tighter availability and rising prices curbed usage. The recovery is expected to be sequential, with LPG flows normalising first, followed by LNG and crude. Under Kpler's base case of a gradual reopening from early July, the initial focus will be on clearing trapped cargoes and restoring shipping flows before Gulf exporters can materially increase exports. Domestic brokerage firm Prabhudas Lilladher expects Q1FY27 to weigh sharply on profitability despite recent respite, with under-recoveries of ₹7-10 per litre expected after considering a ₹10 per litre excise cut and capping of cracks at USD10/bbl and USD15/bbl for MS and HSD respectively. LPG continues to remain the biggest pain point, with losses estimated at around ₹500 per cylinder for Q1FY27. The partial reopening of the Strait of Hormuz is likely to improve Middle Eastern LPG supplies in the coming months, which could help ease prices and reduce India's dependence on higher-cost imports from alternative sources.
