US LNG surge to India amid Hormuz disruptions, SPR near 40-year low

US shipments of liquefied natural gas and liquefied petroleum gas to India reached record levels in May as disruptions in the Strait of Hormuz cut off flows from Gulf producers. Data from energy analytics firm Kpler showed American suppliers delivered 900,000 tonnes of LNG, more than 40 percent of India's total imports that month, and 630,000 tonnes of LPG, exceeding combined Gulf volumes by a wide margin.

The shift stems directly from traffic problems in the critical waterway following military strikes that began in late February. India normally routes about 60 percent of its LNG and nearly all of its LPG through the strait. With those routes hampered, buyers turned to American exporters who could meet the shortfall using expanded shale production and terminal capacity.

Market observers noted that the United States had already been increasing energy sales to India before the current conflict. Abundant domestic resources and growing export infrastructure positioned American firms to capture additional share once alternative supplies tightened. Freight costs that previously limited US competitiveness eased in relative terms as Gulf options faced delays.

At the same time, the same conflict has required repeated releases from America's Strategic Petroleum Reserve. Withdrawals since March total 66 million barrels, pushing inventories toward their lowest point since 1983. The reserve stood at 349.2 million barrels on June 5 and continues to decline at roughly 9 million barrels per week. Officials have cited the need to maintain domestic supply stability and export commitments amid global uncertainty.

Gasoline prices reflect the mixed picture. The national average reached $4.15 per gallon recently, higher than a year earlier though slightly below the prior week's level. Analysts have warned that prolonged closure of the strait could produce sharper price spikes if panic buying emerges in coming weeks.

The episode illustrates how domestic energy development in the United States responds to price signals and infrastructure investment, allowing rapid redirection of cargoes when traditional routes face interruption. It also shows the fiscal and logistical costs associated with sustained military involvement in distant regions, including drawdowns of emergency stockpiles built over decades.

India's import patterns may continue favoring American volumes as long as Gulf access remains constrained. American producers, operating under market incentives rather than state directives, have demonstrated the flexibility to scale deliveries quickly. Whether this trade relationship deepens will depend on the duration of the shipping disruptions and the pace at which new export facilities come online in the United States.