The Hormuz crisis, which disrupted global energy flows for more than 100 days, has underscored India's persistent dependence on Middle Eastern energy supplies, according to Pulkit Agarwal, Head of India Content at S&P Global Energy. Speaking to ANI on the sidelines of the S&P Global Energy New Delhi Energy Briefing on Tuesday, Agarwal stated that the Middle East "continues to remain and today still is one of the most reliable and the only source of LPG which can supply the kind of LPG that India needs."
LPG Import Dependence & Alternative Sources
During the disruption, India attempted to increase LPG imports from alternative suppliers such as West Africa and the United States. However, Agarwal noted that these markets were unable to fully offset the decline in supplies from the Middle East. "India tried to maximise where it can buy LPG from. It can be West Africa, it can be the US, which is the world's largest producer of LPG. Not exactly the kind that India needs, but to some extent India did rely quite heavily on the US to fill in LPG demand," he said.
He highlighted physical constraints: "There was a physical constraint on how much India can buy from the US in the world." As a result, LPG imports into India have fallen significantly in recent months, according to Agarwal. The resumption of normal traffic through the Strait of Hormuz is now a key development for the sector. "If LPG traffic returns to normalcy, we could see the downstream impact of that constraint, which had kicked in over the past few months, starting to ease slightly," he added.
LNG Demand Destruction from High Prices
On liquefied natural gas (LNG), Agarwal noted that India is in a more flexible position because supplies can be sourced from multiple regions. However, higher prices during the disruption weighed on demand. He said, "LNG is a homogeneous commodity. You can buy LNG from other places in the world. You need to pay up for it, but the molecule availability is there."
Prices remained elevated for most of the crisis period. According to Agarwal, the landed price of LNG into India stayed above $16-$17 per mmBtu (Metric Million British thermal unit) for most of the crisis, leading to what he termed "price-led demand destruction." He added that demand could improve if prices fall to around $11-$12 per mmBtu, a level at which LNG becomes more attractive for discretionary consumers.
Key Data Points
| Metric | Detail |
|---|---|
| LPG supply source reliability | Middle East remains the only source capable of supplying India's required LPG grade |
| Alternative LPG sources | West Africa, US – but physically constrained and not exact grade match |
| LPG import trend | Imports have fallen noticeably in recent months |
| LNG crisis landed price | Above $16-$17 per mmBtu for most of the Hormuz crisis |
| LNG demand recovery threshold | Around $11-$12 per mmBtu |
"The market is looking forward to how people buy and sell oil and other energy commodities and how that evolves out of this crisis," Agarwal concluded, highlighting that the episode could shape future developments in energy sourcing and trade.
Implications for Traders and Analysts
For commodity traders and procurement teams, the key takeaway is that India's LPG demand cannot easily be shifted away from the Middle East due to grade requirements and physical export constraints from other regions. The Hormuz crisis has made it clear that any prolonged disruption in the Strait directly impacts Indian LPG supply, creating volatility in domestic prices and import volumes. LNG buyers, meanwhile, are price-sensitive: sustained high prices above $16-$17 per mmBtu destroy discretionary demand, while a drop to $11-$12 could spur renewed buying. The evolution of trade patterns post-crisis will be critical to monitor for risk management and sourcing strategy adjustments.
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