US becomes India's top LNG and LPG supplier
What's the story
The United States has overtaken Gulf countries to become India's top supplier of liquefied natural gas (LNG) and liquefied petroleum gas (LPG) in May. This comes after disruptions in the Strait of Hormuz, a major transit route for these supplies. India usually imports 60% of its LNG and nearly all LPG through this waterway. The disruption began after the US and Israel attacked Iran on February 28.
Supply statistics
US supplied over 40% of India's LNG needs in May
In May, the US supplied 630,000 tons of LPG to India. This is about 60% more than the total amount (380,000 tons) supplied by all Gulf countries combined. The data was provided by Kpler. The US also exported 900,000 tons of LNG to India in May—over 40% of India's total requirement and a threefold increase from April levels.
Export increase
Experts see increased energy trade focus between India, US
The ongoing West Asia conflict has increased US energy exports to India. However, experts say this surge is also part of Washington's strategy to increase energy sales to India. "Going forward, the India-US energy trade will increasingly focus on gas," Sumit Ritolia from Kpler told CNBC. He added that the US is well-positioned to meet India's need for diversified gas supplies with its abundant shale resources and expanding export infrastructure.
Market dynamics
LPG supply to India could cross 1 million tons mark
Before the war, high freight costs had prevented the US from gaining a significant share in India's gas market. However, disruption of supplies from the Gulf has made India more receptive to US gas cargoes. Manish Sejwal from Rystad Energy told CNBC that by end-June, US LPG supply to India could cross the one million-ton mark. LPG is mainly used as cooking fuel in India and its supply/price are sensitive issues for authorities trying to shield consumers from rising prices.
Trade shift
US is biggest beneficiary of gas shift: Nomura
A report by global brokerage Nomura revealed that the US is "the biggest beneficiary" of India's gas sourcing shift. The report said Washington's exports to New Delhi have increased eightfold from pre-war levels. Bineet Banka from Nomura in India told CNBC that Washington wants India to reduce its trade surplus with the US, and higher energy imports could be a way to achieve this.