India Bites Bullet as LNG Prices Soar Amid Strait of Hormuz Disruptions
India's reliance on long-term liquefied natural gas (LNG) contracts with Qatar has been disrupted due to the ongoing US-Iran conflict, causing prices to skyrocket. The Strait of Hormuz remains closed, and ships are unable to pass through, forcing Indian energy majors to purchase LNG at record-high prices.
Gail India Ltd., a state-run gas company, paid over $23 per million British thermal units for a cargo scheduled for delivery in September, according to people familiar with the matter. This is the most expensive LNG shipment imported into India since 2022, and it's not an isolated incident. Gujarat State Petroleum Corp also gave the mid-$23 range per mmbtu for a September cargo.
The Indian government is supporting fertilizer producers that use natural gas by allowing state-backed energy companies to bid up prices in the spot LNG market. This has led to increased competition with LNG buyers in Europe, where gas prices have surged to a five-month high. Bharat Petroleum Corp also agreed to purchase an LNG cargo from the spot market this week.