Due to shipping disruptions in the Strait of Hormuz, which have severely reduced oil and gas shipments from Gulf nations to India, the United States has become India's leading supplier of liquefied natural gas and liquefied petroleum gas as of May.
Approximately 60% of India's LNG and nearly all of its LPG imports rely on this critical waterway. Maritime traffic through the strait has been consistently disrupted since the initial US-Israel strikes on Iran on February 28.
Data from the energy analytics firm Kpler reveals that US exports of LPG to India reached 630,000 tonnes in May. In contrast, India's total imports from all Gulf countries combined were only 380,000 tonnes, making US supply roughly 60% higher.
Kpler's statistics also show that US exports of LNG to India amounted to 900,000 tonnes in May, accounting for over 40% of India's total demand for the month and representing a threefold increase from April's supply levels.
Industry experts note that the Middle East conflict has boosted US oil and gas exports. However, the long-standing US government policy of promoting expanded energy exports to India is also a core driver of this growth. Energy trade cooperation between India and the US had been deepening even prior to the outbreak of the conflict.
Sumit Ritolia, a lead research analyst at Kpler, stated in a CNBC interview that the future of India-US energy trade will increasingly center on natural gas.
He added that the US possesses significant advantages in India's push to diversify its natural gas import sources, thanks to its abundant shale oil and gas resources and the ongoing expansion of export infrastructure.
US Captures Indian Market Share
Before the conflict, high shipping costs had consistently constrained the US's ability to expand its market share for natural gas in India. Following the disruption of supplies from the Gulf, India was compelled to increase its purchases of US oil and gas cargoes.
Manish Sejwal, Senior Vice President of Oil, Condensate, LPG, and Naphtha Markets at Rystad Energy, commented via email to CNBC that prior to this, the landed cost of Middle Eastern LPG had long been lower than that of US supplies, making it difficult for the US to penetrate the Indian market.
Sejwal forecasts that US LPG exports to India could surpass the 1 million tonne mark by the end of June.
LPG is primarily used as a cooking fuel for households in India, making its supply stability and price fluctuations highly politically sensitive. The Indian government has consistently implemented policies to shield ordinary domestic families from the impact of international oil and gas price increases.
A research report released by the international investment bank Nomura on Wednesday pointed out that the shift in India's natural gas import landscape makes the US the "biggest beneficiary." The report estimates that US oil and gas exports to India have surged eightfold compared to pre-conflict levels.
Bineet Banka, a Nomura equity analyst covering Indian energy, explained to CNBC that the US aims to reduce India's trade surplus with it, and "expanding energy imports is perhaps the most feasible way for India to achieve this goal."
Banka also acknowledged that the cost of importing LNG from the US is higher than sourcing it from the Gulf, but "India currently has very limited options."
Since the outbreak of the Iran conflict, the Indian rupee has continued to depreciate against the US dollar, with the rising energy import bill being a significant contributing factor. India is the world's third-largest crude oil importer, the fourth-largest LNG importer, and the second-largest LPG importer.