Middle East Conflict Sends LNG Prices Soaring for India

The ongoing conflict in the Middle East has led to disruptions in marine traffic through the Strait of Hormuz, causing a surge in liquefied natural gas (LNG) prices for India.

Gail India Ltd. recently paid over $23 per million British thermal units (mmbtu) for a September delivery cargo, while Gujarat State Petroleum Corp. reported similar pricing in the mid-$23 range, representing the most expensive LNG shipments imported into India since 2022.

The Indian government is supporting fertilizer producers that rely on natural gas, further intensifying competition for LNG. Historically, India has depended on long-term contracts with Qatar, but Iranian attacks in March damaged Qatar's export terminal, and ongoing tensions have restricted shipping through the Strait of Hormuz.

India is diversifying its energy import sources, now sourcing LNG from 15 countries, up from six, and crude oil from 41 countries, an increase from 27. This expansion aims to reduce India's vulnerability to disruptions in any single market or shipping route.