Indian Oil, the country’s largest refiner, is preparing to sign a deal with Algeria’s state-owned Sonatrach to import liquefied petroleum gas cargoes during 2027, reconnecting the world’s biggest cooking-fuel market with a North African supplier it largely stopped buying from years ago.
Monthly cargoes under the planned agreement are expected to range between 45,000 and 55,000 metric tons, equivalent to 330,000 to 400,000 barrels, made up mainly of propane and butane. Deliveries would be made on a free-on-board basis.
Cheaper Than Aramco-Linked Contracts
Price is the decisive factor. Algerian LPG is selling below the Saudi Aramco-linked contract prices that set the benchmark for most of India’s Gulf purchases. The two companies are not new to each other: Indian Oil and Sonatrach once held a long-term supply agreement before New Delhi shifted its buying to Middle Eastern suppliers.
Hormuz Rewrites the Supply Map
What changed the calculation is the disruption to shipping through the Strait of Hormuz. Since the war against Iran began on February 28, 2026, roughly 1.5 million barrels per day of LPG supply moving through the strait has been interrupted, representing between 25 and 30 percent of global exports. In the first two months of the war, India’s Middle East imports fell by more than 50 percent, or about 430,000 barrels per day.
India draws roughly 60 percent of its consumption from the Gulf, and 90 percent of its Middle Eastern imports pass through Hormuz, leaving it almost fully exposed to a single chokepoint. Algerian cargoes have already started arriving since June 2026, and India is expected to take in about 110,000 tons during August.
A Market of More Than a Billion Users
The scale of Indian demand is what makes the deal worth having for Sonatrach. Some 1.14 billion people in India rely on LPG for cooking, close to a third of all users worldwide, compared with 700 million in China and 251 million in Indonesia, with demand concentrated in rural areas and among lower-income households.
Algeria produced 293.8 thousand barrels per day of LPG in 2024. Distribution inside India is handled by three state-owned companies: Indian Oil, Hindustan Petroleum and Bharat Petroleum. New Delhi is widening its supplier list at the same time to include Canada, Malaysia, Sweden and Argentina, and is targeting a quarter of its imports from the United States by 2027.
This story was produced in the newsroom from the disclosed sources named above.
