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

The United States has become India’s largest supplier of liquefied natural gas and liquefied petroleum gas in May, according to trade data compiled by Kpler, as shipments through the Strait of Hormuz have been curtailed by the ongoing conflict between the United States, Israel and Iran. Washington delivered 900,000 tonnes of LNG to India that month, more than 40 percent of the country’s total imports and three times the volume recorded in April. It also supplied 630,000 tonnes of LPG, roughly 60 percent more than the combined total from all Gulf exporters.

India normally receives about 60 percent of its LNG and nearly all of its LPG through the Strait of Hormuz. Traffic through the waterway has been interrupted since late February, when the United States and Israel conducted strikes on Iranian targets. The resulting shortfall has accelerated a shift toward American cargoes that was already under way before the fighting began.

Energy analysts note that the United States possesses both abundant shale resources and expanding export terminals, giving it a structural advantage in capturing market share when traditional routes are blocked. Sumit Ritolia of Kpler said future India–U.S. energy trade is likely to center on natural gas, with American suppliers positioned to meet India’s diversification goals even after any eventual reopening of the strait.

At the same time, the conflict is drawing down U.S. domestic stockpiles. The Department of Energy has released 66 million barrels from the Strategic Petroleum Reserve since March to stabilize domestic supply and support export commitments. The reserve stood at 349.2 million barrels on June 5 and is declining by nearly 9 million barrels a week. If the drawdown continues at the current pace, holdings will soon fall below the 346.7 million barrel level last seen in 2023 and will approach the lowest point recorded since 1983.

National average retail gasoline prices reached $4.15 a gallon this week, according to AAA, down slightly from the prior week but well above year-earlier levels. Industry analysts have warned that a prolonged closure of the strait could produce sharper price spikes within weeks, leaving policymakers with fewer emergency tools than in past disruptions.

The simultaneous rise in exports and depletion of reserves illustrates the competing pressures created by the conflict. Expanded sales to India strengthen commercial ties that predate the fighting, yet they also require continued releases from a reserve originally intended to cushion domestic shortages. How long those releases can continue without affecting price stability or long-term energy security remains an open question for both the administration and Congress.