Introduction

India, the world’s third-largest oil importer, has committed to increasing its crude oil and natural gas purchases from the United States. This decision aligns with India's strategy to diversify energy imports and strengthen bilateral trade relations with the U.S. At a recent meeting between Prime Minister Narendra Modi and U.S. President Donald Trump, India agreed to enhance energy trade, which could see its energy imports from the U.S. rise from $15 billion to $25 billion.

Why is India Diversifying Its Crude Supply?

India is highly dependent on oil imports, with over 85% of its crude oil needs met from foreign sources. The primary reasons for India's diversification include:

Reducing reliance on a single region for energy security.

Mitigating risks associated with geopolitical tensions.

Exploring cost-effective options to balance its import expenses.

Major Oil Suppliers to India

India’s top crude oil suppliers include:

Russia: 40% of total crude imports.

Middle East (Saudi Arabia, Iraq, UAE): Traditional key suppliers.

United States: Emerging as a significant crude oil and LNG supplier.

According to Reuters, the U.S. exported 3,57,000 barrels per day (bpd) of crude oil to India in February 2024, up from 2,21,000 bpd the previous year.

India’s Oil & Gas Imports: Key Statistics

Total crude oil imported (2023-24): 234.26 million tonnes.

Oil import bill (2023-24): $133.37 billion (a decrease from $157.53 billion in 2022-23).

Natural Gas (LNG) imports (2023-24): 31.8 billion cubic meters (bcm) valued at $13.405 billion.

Petroleum product imports: 48.69 million tonnes, costing $22.93 billion.

LNG and Energy Transition

India aims to increase its natural gas consumption from 6% to 15% of its total energy mix. The U.S. has become a major supplier of LNG (Liquefied Natural Gas) to India, supporting this transition. Minister Hardeep Singh Puri emphasized that energy ties with the U.S. are strategically important for LNG and other fuels.

Role of the U.S. in India's Energy Security

The U.S. is positioning itself as a key oil and LNG supplier to India, facilitating:

Increased investments in oil & gas infrastructure.

Enhancing energy trade & cooperation.

Supporting India’s full membership in the International Energy Agency (IEA).

Impact of Russian Oil Imports

Despite its energy partnership with the U.S., India continues to source a significant volume of discounted oil from Russia. A report by the Centre for Research on Energy and Clean Air states that India bought crude oil worth €49 billion from Russia in the third year of the Ukraine war. Russia’s share in India’s crude imports surged from under 1% to 40% post-2022.

Future of India’s Energy Roadmap

India’s energy strategy includes:

Expanding clean fuel adoption (natural gas, LNG, ethanol, biofuels).

Building EV infrastructure to reduce crude dependency.

Enhancing domestic crude oil production (currently meeting only 13% of demand).

Encouraging renewable energy & alternative fuels.

Conclusion

India’s decision to increase U.S. oil imports is a strategic move to diversify energy sources, ensure energy security, and strengthen economic ties. However, its continued engagement with Russia and Middle Eastern suppliers highlights a balanced approach to meeting its growing energy needs.

For the latest updates on India’s energy policies, visit Ministry of Petroleum & Natural Gas.

By Team Atharva Examwise #atharvaexamwise