India turned to the US, Nigeria and Australia for LPG supplies after disruption in the Strait of Hormuz cut off nearly 30% of its usual imports.
Analysts said the crisis exposed India’s dependence on West Asian energy flows, with an estimated 35% to 50% of its crude imports routed through Hormuz.
The reopening of the Strait has eased immediate pressure, but oil and gas markets remain vulnerable to renewed volatility.
S&P Global Energy analysts said India is likely to retain more diversified sourcing strategies to reduce exposure to future geopolitical shocks.
India increasingly turned to the United States (US), Nigeria and Australia for liquefied petroleum gas (LPG) supplies after disruptions in the Strait of Hormuz cut off nearly 30 per cent of its usual imports, exposing the country's dependence on West Asian energy flows and prompting a broader reassessment of energy security.
The disruption affected about 30,000 tonnes of LPG supplies a day and hit small and medium businesses particularly hard, energy analysts said during a roundtable discussion in New Delhi on June 23, 2026. India imports nearly 89 per cent of its crude oil requirement and routes an estimated 35 per cent to 50 per cent of its crude imports through the Strait of Hormuz, one of the world’s most important energy chokepoints.
Analysts said the episode had accelerated efforts to diversify fuel sourcing, even as uncertainty remains over Gulf energy flows and future oil prices.
“India is a big LPG consumer, and the next alternative everyone is looking at is the US,” said Johan Utama, principal research analyst at S&P Global Energy. He said India had started sourcing additional LPG cargoes from Nigeria and Australia, while contracted cargoes from the US were beginning to arrive to bridge supply gaps.
But analysts said India’s LPG demand remains closely aligned with West Asian production streams, limiting how quickly supplies can be replaced. Utama said long-term US contracts could become more important as India tries to balance energy security, affordability and environmental concerns. India’s LPG demand is expected to grow by about 4 per cent a year.
The outlook improved after the United States and Iran signed a memorandum of understanding on June 17, 2026 that provided for the reopening of the Strait of Hormuz and the gradual lifting of restrictions on commercial shipping, according to S&P. However, the situation remains fluid. Iran announced renewed restrictions on the strait on June 20, citing alleged ceasefire violations, but the US government claims commercial vessel traffic has continued, with oil tankers and liquefied natural gas carriers resuming some voyages through the waterway.
According to energy outlet ENERGDIVE, shipping activity remains below normal levels due to security concerns and navigation risks, including reports of mines in parts of the channel. As a result, while the agreement initially boosted confidence in shipping markets and supported the movement of stranded Gulf cargoes, full normalisation of maritime trade through the Strait of Hormuz has yet to be achieved.
The reopening was expected to restore confidence in shipping markets and allow liquefied natural gas (LNG) cargoes stranded in the Gulf to resume normal movement. According to S&P Global Energy, approximately 17 per cent of global LNG supply was disrupted during the closure of the Strait. India, the world's fourth largest LNG buyer, weathered the disruption better than many expected. Qatar and the United Arab Emirates accounted for 59 per cent of India's LNG imports in 2025, but additional purchases from Oman, the US, Nigeria and Angola helped offset supply shortages.
India’s LNG imports fell by 5 per cent in April 2026 and 2 per cent in May 2026 compared with the previous year. Utama said India was likely to retain some of this diversified LNG sourcing to reduce the impact of future disruptions.
Government intervention also helped cushion the impact, analysts said, by redirecting scarce gas supplies to priority sectors such as fertiliser production and residential consumers.
At the same time, policy support for natural gas remains intact, including efforts to expand piped natural gas connections for households and industries. Analysts said the disruption is likely to strengthen the government's push towards diversified gas sourcing and expanded gas infrastructure to reduce exposure to future supply shocks.
Despite the scale of the disruption, oil prices have remained relatively restrained.
“The effective closure of the Strait of Hormuz was the largest oil supply disruption in history. It was, and for the moment still is, extraordinary. But what is surprising is the limited price reaction,” said Jim Burkhard, vice-president and head of research for oil markets, energy and mobility at S&P Global Energy.
He said inventory management, lower crude imports by China and Japan, and higher exports from the US had helped prevent a sharper price spike. But he warned that global oil inventories were likely to keep falling through June and July, which could put renewed upward pressure on prices.
S&P Global Energy’s longer-term outlook places oil prices at about $70 to $75 a barrel, which Burkhard said was needed to sustain upstream investment.
Shipping networks were also disrupted. Benjamin Tang, director and global head of liquid bulk at Commodities at Sea, S&P Global Energy, said vessel traffic through the Strait of Hormuz fell to 10 per cent of pre-conflict levels after the Iranian conflict and US naval blockade.
But producers diverted cargoes through the Red Sea and increased ship-to-ship transfers east of Hormuz, helping West Asia crude exports recover to more than 10 million barrels a day in June.
Analysts said the crisis had reinforced the need for India to diversify supplies, expand gas infrastructure and secure access to overseas oil and gas assets.
“Resilience is becoming the defining metric of value,” said Nick Sharma, executive director for upstream energy at S&P Global Energy. “Access to stable resources, accelerated project timelines and diversified supply portfolios are taking precedence over pure scale or cost optimisation.”