India’s energy strategy is increasingly defined by balance rather than allegiance. As demand surges and geopolitical pressure mounts, New Delhi is locking in long term supply wherever it can, from gas in the Gulf to discounted crude from Russia, alongside nuclear partnerships that promise reliable baseload power. The approach reflects a broader effort to insulate economic growth from volatility, even as global energy markets fracture along political lines. UAE President Sheikh Mohamed bin Zayed Al Nahyan concluded his visit to India’s Prime Minister Narendra Modi on Monday, with the two countries signing a long-term LNG supply deal and agreeing to double bilateral trade to over $200 billion by 2032.
The Abu Dhabi National Oil Company (Adnoc) will supply India’s Hindustan Petroleum Corporation with 500,000 tonnes of liquefied natural gas (LNG) per annum in a deal valued at $3 billion, over 10 years beginning in 2028. The deal will deepen energy ties between the two countries, with Adnoc having closed a long-term LNG supply deal with Indian Oil Corp. for 1.2 million tons annually worth between $7 billion and $9 billion, for a period of 15 years.
The two countries also agreed to expand cooperation on nuclear energy, including both small modular reactors and larger conventional projects. The collaboration is supported by India’s recently passed SHANTI Act, which opens parts of the nuclear sector to private participation and foreign partnerships. For New Delhi, the move fits with a broader push to expand low-carbon baseload power as electricity demand continues to rise. For the UAE, it builds on experience gained from the Barakah nuclear plant and supports a longer-term strategy to remain a key energy supplier even as global demand gradually shifts away from oil.
Meanwhile, India continues to buy substantial volumes of Russian oil.
U.S. President Donald Trump recently threatened to slap the country with more tariffs for buying Russian oil, saying, "They do trade, and we can raise tariffs on them very quickly," Trump said about India's Russian oil purchases. Likewise, Republican Senator Lindsey Graham told reporters, "If you are buying cheap Russian oil, (you) keep Putin's war machine going. We are trying to give the President the ability to make that a hard choice by tariffs."
Graham has proposed punitive tariffs of up to 500% on countries that continue to buy Russian oil. Last year, Reliance Industries, India's largest private refiner, significantly reduced purchases after the Trump administration slapped sanctions on Russian energy giants Rosneft and Lukoil in late 2025. The sanctions targeted shippers and traders, causing initial drops in overall Russian oil imports, which were later offset by purchases by state-owned refiners (PSUs). PSUs such as Indian Oil (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL) have maintained or even increased their intake of Russian crude, often through non-sanctioned intermediaries, using long-term contracts.
India is expected to contribute the majority of global oil demand growth in the coming years, leading all other nations, thanks to rapid economic expansion, industrialization, increasing car ownership and rising incomes.
Indeed, India could account for nearly half of all new oil demand by 2035, with the International Energy Agency (IEA) projecting the country’s energy demand will grow at a 3% annual clip through 2035, the fastest in the world. And, a lot of that growth will come from renewable energy. Last year, India and China recorded the first drop in coal use in more than 50 years, highlighting their ongoing clean energy transition. According to an analysis by the Centre for Research on Energy and Clean Air (CREA), India’s coal-powered electricity generation fell 3.0% year-on-year to 57 terawatt hours while China’s fell 1.6% Y/Y to 58 TWh, marking the first decline since 1973. Faster clean-energy growth accounted for 44% of the reduction in coal and gas consumption; milder weather accounted for 36% while 20% was due to slower underlying demand growth. According to CREA, this is the first time that renewables are playing a significant role in displacing coal from India’s energy mix.
However, India will continue buying and using coal for the foreseeable future, driven by rising energy demand and the need for reliable baseload power, despite significant growth in renewables. India's growing economy and increasing power consumption necessitate coal for grid stability, with plans for more thermal capacity and a projected increase in overall coal demand to 1.5 billion tonnes by 2030.
By Alex Kimani for Oilprice.com
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