Winning Bizness Desk

Mumbai. India has taken a major step in diversifying its fuel supply basket by finalising its first-ever structured liquefied petroleum gas import agreement with the United States. State-run oil marketing companies have together signed a one-year contract to source LPG from the US Gulf Coast for the contract year 2026, marking a significant shift in India’s global procurement strategy. The deal will meet nearly 10 percent of India’s annual LPG import needs and reflects the government’s continued push for reliable, long-term access to affordable cooking fuel.

Government firms secure long-term US supplies

Union Minister Hardeep Singh Puri announced the development, calling it a historic moment for the Indian LPG market. Under the agreement, IndianOil, BPCL and HPCL will jointly import 2.2 million tonnes of LPG from the US. The minister said the government has been expanding sourcing options to ensure uninterrupted availability for Indian households. Teams from the three PSUs held extensive negotiations with major American suppliers before closing the deal. Pricing will be linked to Mount Belvieu benchmarks, a widely followed reference point for the US LPG industry.

Think-tank links sanctions to US shale sector gains

The Global Trade Research Initiative (GTRI) said the announcement comes at a time when global oil dynamics are being reshaped by sanctions on Russian energy giants Rosneft and Lukoil. These two companies produce almost 57 percent of Russia’s crude, and their restriction has disrupted one of the world’s largest oil flows. GTRI argues that the sanctions, though publicly justified as support for Ukraine, also reflect Washington’s intent to safeguard its shale oil sector, which suffers when prices remain low.

Oil prices surge after sanctions move

GTRI noted that immediately after the sanctions were enforced on October 22, crude prices surged by 7.5 percent within a week, rising from 61 dollars to 65.6 dollars per barrel. The think-tank said the move tightened global supplies and triggered expectations of further price escalation. This has had far-reaching implications not only for oil-importing nations like India but also for producers seeking stable margins in volatile markets.

US sanctions tougher than UN measures

The report highlighted that US sanctions differ from United Nations-backed restrictions because they extend beyond targeted firms and affect any entity doing business with them. Violators face the risk of being added to the US Office of Foreign Assets Control’s Specially Designated Nationals list, effectively cutting them off from the international payments system including SWIFT. These actions also restrict access to shipping, insurance and technology, forcing global companies to immediately halt dealings with sanctioned Russian entities.

Shale sector benefits from rising crude prices

According to the GTRI assessment, the sanctions unintentionally boosted the economic viability of US shale oil operations. Shale production becomes profitable only when crude trades above 60 to 70 dollars per barrel. With the sanctions pushing prices upward, US shale operators gained breathing room and expanded production and exports. The result has been stronger profits for American energy companies and record highs in US crude and LNG shipments.

India strengthens future energy security

The new deal with the US adds another layer of protection for India against supply shocks at a time of geopolitical strain in global markets. By securing a long-term, structured supply line and broadening its sourcing network, India is better placed to manage future uncertainties in fuel availability and pricing. The agreement reflects a strategic effort to reduce risk, stabilise domestic supply and expand India’s global energy partnerships.

Summary pointers:

• India signs first structured LPG import deal with the US for 2026.
• PSUs IndianOil, BPCL and HPCL to import 2.2 million tonnes.
• Deal will meet about 10 percent of India’s annual LPG imports.
• Pricing benchmarked to Mount Belvieu standards in the US.
• GTRI links sanctions on Russian firms to US shale sector benefits.
• Sanctions caused global crude prices to rise sharply within a week.
• Agreement strengthens India’s long-term fuel security amid global tensions.