India wants to reduce trade gap with US. Will buy American gas

The world’s third-largest importer and consumer of crude oil relies heavily on Middle Eastern producers of liquefied petroleum gas (LPG), with more than 90% of its approximately 20.5 million tonnes of imports in 2024 coming from there.

LPG is a mixture of propane and butane used as a cooking fuel, imported mainly by state-owned retailers Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum and sold at a subsidized price to households.

India has rarely bought American LPG in the past because of higher shipping costs, Reuters reported, but state-owned retailers began reversing that trend in May this year after China imposed retaliatory import tariffs on American propane. India plans to scrap an import tax on U.S. propane and butane used to make LPG.

US-India trade balance is set to grow

India has pledged to increase its energy purchases from the U.S. by $10 billion to $25 billion in the near future, and the two countries in February agreed to reach $500 billion in bilateral trade by 2030.

India's imports of US crude oil have more than doubled this year , Reuters sources said. "We look at the United States as a reliable alternative source of both crude oil and LPG . We need to diversify our LPG sources," the source said.

India diversifies oil suppliers

India is diversifying its oil suppliers to reduce geopolitical risks and support growing refining capacity. However, LPG suppliers remain focused on the Middle East, typically buying on a free-on-board (FOB) basis.

Chinese import tariffs on US propane, currently at 10%, have opened up arbitrage opportunities for Indian buyers, further encouraging a shift to US cargoes.

Indian state refiners are seeing annual LPG demand growth of around 5-6 per cent, with total imports expected to rise to 22-23 million tonnes by 2026.

The International Energy Agency predicts India's LPG demand will grow by an average of 2.5% between 2024 and 2030, reaching 1.2 million barrels per day, or about 37.7 million tonnes.

India's coal production in April 2025, the first month of fiscal year 2025-2026, reached 81.57 million tonnes, reflecting a year-on-year growth of 3.63 per cent, according to data from the Indian Coal Ministry.