India plans to increase its LPG purchases from the US, signaling a shift in its import strategy. With new tenders, record spot purchases, and a significant import expansion by 2026, India is rapidly moving towards reducing costs and diversifying its supply sources.
Indian Refiners: India is preparing to issue a second tender in the coming months to purchase four additional LPG cargoes from the US. This procurement will be on a Free On Board (FOB) basis, allowing refiners to use their chartered vessels for long-distance LPG shipments from the US for the first time. The primary objective of this decision is to reduce shipping costs and make the import process more flexible. According to sources, Indian refiners also plan to issue new LPG tenders on a spot basis in early 2025, which could enable India to benefit from better rates in the global market.
Record Level LPG Purchases from US
Kpler data indicates that between January and November 2025, India has purchased 1.42 million tonnes of LPG on a spot basis from the US. This marks the highest level to date. In comparison, purchases were only 0.1 million tonnes in 2024 and 0.4 million tonnes in 2023. India imports over 60% of its LPG requirements, with most supplies historically coming from Middle Eastern countries. However, this year's volatility in global prices and the availability of cheaper supplies from the US have prompted India to diversify its import sources.
Impact of Middle East Price Volatility
According to a senior trader, LPG prices in the Middle East were above $600 per tonne at the beginning of the year, while crude oil prices were falling. This disparity compelled India to seek alternatives. As soon as India decided to procure a significant quantity of LPG from the US for the first time, Middle Eastern suppliers began to cut their prices. Saudi Aramco has set the price for propane at $495 per tonne and butane at $485 per tonne for December, close to November's lows.
Significant Expansion of US LPG Imports in 2026
India is set to multiply its US LPG imports significantly in 2026. Combining existing spot purchases and term contracts, the total value of LPG imports from the US could reach approximately $2 billion in 2026. This was only $60 million in 2024. This shift will not only secure India's energy needs but also help reduce India's trade surplus with the US. This year, India has entered into agreements with three global traders to import up to 2 million tonnes of US LPG on a term basis in 2026.
Chartered Vessels to Reduce Shipping Costs
Indian Oil, Bharat Petroleum, and Hindustan Petroleum will utilize their chartered vessels for transporting US LPG. The cost of transporting LPG from the US is three times higher compared to the Middle East. FOB purchases will give India control over vessels and reduce logistical expenses. Sources indicate that if Indian refiners use their own charters, it will be possible to balance the costs of US LPG and Middle East LPG in the future. For 2026, India has finalized deals for 48 LPG cargoes, with 24 cargoes allocated to Indian Oil and the remaining to BPCL and HPCL.
Price Comparison Between US LPG and Middle East LPG
India imported 21.5 million tonnes of LPG in 2024, and 21.2 million tonnes have been imported in the first 11 months of 2025. Most supplies originated from the UAE, Qatar, Kuwait, and Saudi Arabia. However, in 2026, US LPG might be approximately 10% more expensive for India as it is linked to Mont Belvieu prices, and freight costs range from $130 to $140 per tonne. Shipping costs from the Middle East are significantly lower than this. Despite this, US LPG is generally $100 per tonne cheaper than Aramco prices. Recent significant drops in Middle Eastern prices have narrowed the price difference between the two.
