High LNG Prices Hit India Amid Iran Conflict and Hormuz Closure
The ongoing conflict in the Middle East is causing significant disruptions in marine traffic through the Strait of Hormuz, leading Indian energy companies to purchase liquefied natural gas (LNG) at some of the highest prices in recent years. Gail India Ltd. recently paid over $23 per million British thermal units (mmbtu) for a September delivery cargo, while Gujarat State Petroleum Corp. reported similar pricing in the mid-$23 range. These prices represent the most expensive LNG shipments imported into India since 2022.
As state-backed energy companies increasingly turn to the spot LNG market, prices are being driven up. The Indian government is supporting fertilizer producers that rely on natural gas, further intensifying competition for LNG. Historically, India has depended on long-term contracts with Qatar, the world’s second-largest LNG supplier. However, Iranian attacks in March damaged Qatar’s export terminal, and ongoing tensions have restricted shipping through the Strait of Hormuz.
India Widens LNG Basket
India is diversifying its energy import sources, now sourcing LNG from 15 countries, up from six, and crude oil from 41 countries, an increase from 27. This expansion is a response to geopolitical tensions and disruptions along key maritime routes that threaten energy supply reliability. The Ministry of Petroleum and Natural Gas stated that this broader sourcing network aims to reduce India’s vulnerability to disruptions in any single market or shipping route.
Minister of State for Petroleum and Natural Gas Suresh Gopi emphasized that this diversification enhances India’s ability to manage supply disruptions and market volatility. The ministry is actively monitoring potential threats to energy flows and reviewing global supply conditions in collaboration with public-sector oil and gas companies. The government continuously assesses these conditions to ensure the uninterrupted availability of crude oil, LNG, and petroleum products.
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