China’s tariffs on US goods prompt ADNOC to reroute cargoes, offering cost benefits to India
In a strategic shift driven by China’s recent tariffs on U.S. goods, the Abu Dhabi National Oil Company (ADNOC) will begin supplying some U.S.-origin liquefied petroleum gas (LPG) to India starting in June, according to industry sources. The move is expected to help India lower import costs while allowing ADNOC to redirect more of its own LPG to the Chinese market, where demand and premiums have surged, reported reuters.com.
India, the world’s second-largest LPG importer, relies heavily on the Middle East — particularly Saudi Arabia, UAE, Qatar, and Kuwait — for over 80% of its LPG under long-term contracts. Earlier this month, Indian refiners requested that some of their term supply from Middle East partners be swapped with U.S. LPG at discounted rates based on the Saudi Contract Price (CP).
India to receive discounted US LPG cargoes as ADNOC redirects Middle East supply to China.
In response, ADNOC, through its trading arms, has agreed to deliver U.S. cargoes to Indian refiners like Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) under existing annual contracts beginning June or July.
Logistics and blend preferences may limit full-scale replacement of Middle East LPG with U.S. supply. However, a full substitution of Middle East supply with U.S. LPG remains challenging. “It is difficult to replace the entire volumes with U.S. LPG,” one source noted. LPG analyst June Goh from Sparta Commodities highlighted that India’s domestic use requires a higher butane content, which limits the utility of U.S. propane-rich cargoes.
India imported approximately 29.66 million metric tons of LPG in 2023–24, accounting for about 60% of its total consumption, according to government data.
Neither ADNOC nor the Indian refiners involved responded to Reuters’ requests for comment.
