India LNG Prices Surge Above $23/MMBtu As Iran War Disrupts Supplies

India’s energy companies are facing a sharp increase in liquefied natural gas (LNG) costs as geopolitical tensions surrounding the Iran war disrupt global supplies and intensify competition for cargoes.

According to a report by Bloomberg, state-run GAIL India recently paid more than $23 per million British thermal units (MMBtu) for an LNG shipment scheduled for September, according to people familiar with the transaction. Gujarat State Petroleum Corp also reportedly paid in the mid-$23 range for a similar cargo.

These prices are among the highest India has paid for spot LNG since 2022, highlighting the growing pressure on the country’s energy import bill.

Indian state-backed companies have increasingly turned to the spot market as the government seeks to ensure adequate gas supplies for sectors such as fertiliser production, which relies heavily on natural gas.

Global supply disruptions raise competition

India traditionally relies on long-term LNG contracts, particularly with Qatar, one of the world’s largest LNG suppliers.

However, disruptions to Qatar’s export infrastructure following Iranian attacks in March, coupled with continued shipping difficulties through the Strait of Hormuz, have constrained available supplies.

At the same time, Indian buyers are competing with European importers, where natural gas prices have climbed to their highest levels in about five months.

The tighter market has prompted additional Indian purchases. Bharat Petroleum Corp. has also reportedly agreed to buy an LNG cargo from the spot market this week, although the price of that shipment was not immediately known.

The elevated LNG prices could increase costs for Indian industries and put further pressure on sectors dependent on imported natural gas, particularly fertiliser producers, while geopolitical uncertainty continues to weigh on global energy markets.