New Delhi: India’s state-run oil companies have finalised a landmark one-year agreement to import liquefied petroleum gas (LPG) from the United States in 2026, marking a strategic shift in New Delhi’s energy sourcing and an effort to ease trade tensions with Washington.
The decision comes at a time when US President Donald Trump has imposed a 50 per cent tariff on Indian goods, repeatedly citing America’s trade deficit with India as a concern.
According to an official statement issued on Monday, Indian public sector oil firms have sealed a “structured contract” to bring around 2.2 million tonnes of LPG from the US Gulf Coast during the 2026 contract year. This quantity represents nearly 10 per cent of India’s annual LPG imports, making it the first long-term US LPG supply arrangement for the Indian market.
India, despite being self-reliant in fuels such as petrol, diesel, and jet fuel, still imports about 65 per cent of its LPG requirement, which stood at 31 million tonnes. In 2024, nearly 90 per cent of the 20.4 million tonnes of LPG imported came from West Asian suppliers including the UAE, Qatar, Kuwait, and Saudi Arabia. The US has supplied shipments in the past, but only sporadically.
Under the new arrangement, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) will jointly import 48 very-large gas carriers (VLGCs) of LPG next year. Supplies will be sourced from major global energy companies such as Chevron, Phillips, and TotalEnergies Trading SA.
India has indicated its willingness to expand energy purchases from the US as part of an ongoing bilateral trade dialogue. Currently, around 8 per cent of India’s crude oil comes from American suppliers. Imports of US crude rose sharply in the first half of 2025 to 271,000 barrels per day, up 51 per cent from the same period in 2024.
However, logistical challenges due to a 45-day shipping route from the US limit further expansion, compared to quicker Middle Eastern deliveries.
Oil Minister Hardeep Singh Puri announced the deal on X, calling it “a historic first” and a major step for one of the world’s fastest-growing LPG markets.
He said the contract marks India’s shift to using Mount Belvieu—a key global pricing benchmark—for LPG procurement, which is expected to bring more transparency and stability in pricing. He added that a joint PSU delegation had held extensive discussions with US producers over the past several months before finalising the agreement.
Puri highlighted that despite global price pressures, Ujjwala beneficiaries continue to receive LPG cylinders at ₹500–550, while the actual market price is over ₹1,100. He noted the government spent more than ₹40,000 crore last year to protect lower-income households from rising international LPG costs. For non-Ujjwala users, a 14.2 kg cylinder currently costs ₹853.
The new US contract, officials said, strengthens India’s energy security while providing a diversified supply chain that can help shield consumers from global volatility.
