The United States is looking to increase its exports of crude oil and natural gas to India—the world’s most heavily import-dependent nation. As such, India is a tasty morsel for any producing country with extra barrels. Yet there is a reason that the U.S. is not already a major supplier to the subcontinent—there are simply too many obstacles on this course.
Last week, Washington’s ambassador to New Delhi, Sergio Gor, said on X that he’d met with India’s energy minister, Hardeep Singh Puri, to discuss “Expanding access to reliable American energy [which] will further deepen our economic ties and support long-term energy security and diversity for both nations.”
The United States accounts for about 9% of India’s oil imports, based on 2024 numbers. The average daily for that year stood at 158,000 barrels, as opposed to 1.754 million barrels daily from Russia and 1.005 million barrels daily that India imported from Iraq. And now, India has started buying Iranian crude after a seven-year pause, which is the latest sign that it would be tough for the U.S. to change the current energy import landscape in India.
Just how tough it would be was made clear earlier this month, when the United States was forced to issue sanction waivers for both Iranian and Russian crude to ease the effect of the supply crunch caused by the war that the U.S. and Israel began against Iran on February 28. Being as heavily dependent on imported energy as India is, the impact was severe, prompting the U.S. to act to preserve bilateral relations that came under strain last year already amid President Trump’s tariff offensive and then the additional levies he slapped on India for buying Russian oil.
Yet India is also buying a lot more Russian oil now, along with Iranian barrels, with the United States’ blessing. Washington even extended a sanction waiver for Russian barrels days after signaling it would not issue such an extension. The question that begs to be asked, of course, is why not just offer India more U.S. barrels.
The first reason is the price. Most of India’s oil and gas imports come from the Middle East because of its convenient geography, namely, its proximity to the subcontinent itself, ensuring lower transportation costs. It is for the same reason that imports from Russia have been on such a strong rise since 2022, along with the often substantial discount that Russian exporters were forced to sell their oil at, due to Western sanctions.
Yet India earlier this year—before the war in the Middle East began—promised it would buy some $500 billion worth of U.S. “U.S. energy, information and communication technology, coal, and other products.” This promise, it appears, is yet to start materializing judging by the efforts of Ambassador Gor to convince India’s government to start buying more U.S. energy.
Price is India’s top concern when it comes to energy imports, which account for over 85% of demand. It was because of price that India’s crude oil imports shrank by 15%, but Russian oil imports specifically surged by 90%, following the issue of the sanction waiver. It was because of the price that India returned to Iranian crude, made available by the other sanction waiver Washington issued. Finally, it was because of price that India’s state-owned energy major ONGC said in March it would invest between $18 and $20 billion in new oil and gas drilling to strengthen the country’s energy security. Yet there has been no word about boosting imports from the United States in any substantial way.
CNBC reported last week that, in addition to prices, another reason why the U.S. was unlikely to become a major energy supplier to India was refinery configuration. Most U.S. crude is light and sweet while India’s refineries are configured to maximize diesel production, which requires heavier, sourer grades. Add that to the price factor, and it becomes clear that only some form of major discount could boost Indian buyers’ appetite for U.S. oil—a development that is highly unlikely to originate within private companies in a global supply crunch situation.
In gas, however, things may be different. India is a huge importer of liquefied natural gas, liquefied petroleum gas, ethane, and propane. The U.S. has a lot of all these and is eager to export more of them. With gas exports from the Middle East badly affected by the war, the U.S. is a natural alternative for fuels that India consumes in significant volumes. Yet, once again, price would be a problem, as noted by a Rystad Energy analyst who told CNBC that “the U.S. can emerge as a natural partner” to India in LPG and LNG, but added that this would necessitate discounts.
Boosting energy exports to the world’s biggest importers, one way or another, is at the heart of the Trump administration’s energy dominance plan. The boost, however, can only happen if buyers have a strong motive to buy more U.S. oil and gas, such as price discounts or a supply crunch that limits options. Yet the situation with India proves that the supply crunch is not working as well as might be expected.
By Irina Slav for Oilprice.com
