Indian LPG Buyers Still Cautious Despite Easing Supply Restrictions: Sources
Indian LPG buyers remain cautious despite the government’s decision to lift restrictions on non-domestic LPG usage following an improvement in domestic availability, trade sources said.
India’s Ministry of Petroleum & Natural Gas said in a news release on Thursday that non-domestic LPG supplies have been restored to pre-war levels, while previous restrictions on commercial LPG usage imposed during the Middle East conflict have been withdrawn.
Bulk LPG deliveries, which were suspended at the onset of the conflict, will also resume at up to 50% of pre-conflict consumption levels.
The move follows the U.S.-Iran peace deal aimed at ending the conflict and resuming global trade and shipping through the Strait of Hormuz.
India faced severe LPG shortages during the conflict, given its heavy reliance on Middle East supplies. Vortexa data shows the country imported 23.95 million metric tons of LPG in 2025, with 22.21 million mt, or 92.8%, sourced from the Middle East.
With the disruption to regional trade flows, Indian buyers diversified supply and increased purchases of U.S. Since the outbreak of the conflict in late February, the U.S. has become India’s largest LPG supplier in the subsequent months, the same data shows.
The petroleum ministry invoked the Essential Commodities Act in early March to address the supply shortage, requiring all propane and butane streams to be diverted toward LPG production while prioritizing domestic household demand over production of petrochemical feedstock, OPIS previously reported.
However, while some market participants expected Indian buyers — especially petrochemical firms — to quickly return to Middle East cargoes following the peace deal, many said importers remain cautious.
“The priority now is getting India-bound LPG cargoes already loaded in the Middle East safely through the Strait of Hormuz, rather than sending more ships into the region,” a source familiar with the matter said. “Many shipowners are still hesitant.”
Other sources noted that ensuring adequate domestic LPG availability remains the primary focus. Since the announcement of the peace deal, only state-owned refiners Bharat Petroleum Corp and Indian Oil Corp. have issued tenders seeking very large gas carrier tonnage for Middle East LPG loadings, with the cargoes intended for domestic distribution, OPIS reported earlier.
Analysts added that importers are also under no immediate pressure to secure additional cargoes, having already fixed an estimated 1 million mt of July arrivals, most of which are U.S. spot cargoes.
Fresh uncertainty has also emerged after reports of a vessel attack while transiting the Strait of Hormuz on Thursday. The International Maritime Organization said it subsequently paused its evacuation plan for stranded ships in the Middle East.
Market sources said the discount for a Middle East FOB 2:2 mixed LPG cargo against the July CP widened to around $45/mt due to weak buying interest from Indian importers. It was previously marked at around $20/mt.
—Reporting by Cheryl Lee, clee@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com