India Locks In US Energy Deals as Hormuz Stalemate Persists
A military stalemate at the Strait of Hormuz has pushed India toward US barrels, making Washington its top LNG and LPG supplier in May (2026-05).
JKM, the Asian LNG benchmark, rose 1.39 percent to $24.09 per MMBtu on Friday (2026-09-04), reflecting sustained tightness across Asian spot markets as the Strait of Hormuz conflict shows no sign of resolution. CSIS described the situation in early August (2026-08-05) as a military stalemate — "no war, no peace" — with the effective closure of the strait cutting Gulf liquids production by roughly 15 million barrels per day.7,6
For India, the disruption has been severe. The country's heavy dependence on Gulf seaborne imports left it acutely exposed from the moment hostilities with Iran began, and the months since have forced a restructuring of supply chains that would normally take years to build.5
The resilience has been real. S&P Global data showed India's LNG imports fell only 5 percent despite a 17 percent disruption to global supply, with May (2026-05) volumes down just 2 percent year-on-year. Diversified sourcing from Oman, the United States, Nigeria and Angola absorbed most of the shock.6
The United States took the largest single share of that pivot. In May (2026-05), American LNG shipments to India reached 900,000 tonnes — roughly 40 percent of India's total needs and three times April's volumes. The US also overtook Gulf suppliers on LPG, sending 630,000 tonnes, 60 percent more than India received from the Gulf region that month.5
New Delhi has moved to cement that relationship. India signed a one-year deal in 2026 to import 2.2 million metric tons of LPG from the United States — the first structured contract for US LPG in the Indian market, per Atlantic Council reporting. Foreign Minister S. Jaishankar announced in May (2026-05) that India would expand energy ties with Washington following bilateral talks with Secretary of State Marco Rubio in New Delhi.2,5
The diplomatic relationship has been tested all the same. On June 12 (2026-06-12), Jaishankar phoned Rubio to register a "strong protest" over the killing of three Indian seafarers during the conflict — a rupture that Foreign Policy reported is likely to outlast the war itself. The financial toll has compounded the political strain: Indian government data showed foreign investors pulled over $20 billion from Indian equities in the first four months of 2026, and the rupee fell to a historic low against the dollar.4,1
Russia, which had become India's largest crude supplier after 2022, has also lost ground. Its share of Indian crude imports dropped to under 20 percent by January (2026-01), as sanctions constraints and logistical friction limited Moscow's ability to scale volumes and fill the Gulf gap.2
American supply capacity runs well beyond what India has so far contracted. US crude output exceeded 13 million b/d, with total liquids above 20 million b/d — a supply base Washington is deploying commercially and diplomatically. Analysts at the East Asia Forum have noted the war has fuelled doubts about US security commitments across the Indo-Pacific. But on energy supply, Washington has concrete barrels to offer.3,1
The energy system has shown unexpected adaptability. S&P noted that alternative routing through the Red Sea and ship-to-ship transfers east of Hormuz helped effective Middle East crude exports rebound to over 10 million b/d after the initial shock. ICE Brent crude front-month traded at $94.97 per barrel on Friday (2026-09-04) — elevated against pre-conflict levels but well short of the acute spike early disruption forecasts had implied.6
The strained bilateral relationship carries real commercial consequences. The June (2026-06) protest over the seafarers' deaths injected friction into a supply negotiation that India urgently needs to conclude. Washington is also deploying Venezuelan crude — now under US control, across an estimated 303 billion barrels of reserves — to reshape global supply chains and reduce Iran's leverage in any eventual peace process, according to reporting cited by analysts at the East Asia Forum. Whether New Delhi moves beyond the current LPG contract into longer-term LNG commitments, and on what commercial terms, is the cleaner test of how durable this crisis-born energy relationship actually is.4,1