Crude imports drop 16% in January as US surges, Russia slips

By: Shantanu Bhattacharji

New Delhi may deepen crude ties with Washington. However, diversification remains essential amid price swings and geopolitical uncertainty. Long-term reliance will depend on competitive pricing, secure supply, and policy clarity.

India’s energy matrix is undergoing a quiet but significant reshuffle—driven less by economics and more by geopolitics. In January, crude oil imports from the US soared over four times compared to a year ago, even as shipments from Russia and West Asia declined. Overall, the crude imports dropped 16.3 per cent year-on-year, but America emerged as the standout supplier, according to official trade data.

The shift aligns with a fresh wave of Biden-era sanctions targeting Russian oil, rolled out just before the administration’s exit. With Russian flows retreating for a second consecutive month, India—long known for its tactical energy sourcing—is increasingly turning to American barrels to plug the shortfall.

Experts say India is likely to solidify its crude ties with the US. However, diversification remains a strategic imperative amid price swings and uncertain geopolitical alignments. Any long-term pivot to US energy will hinge on competitive pricing, secure supply contracts, and policy consistency in Washington.

Moscow still holds the top spot in India’s oil import ledger, supplying 35 per cent of its crude. But that dominance is under pressure. In January, Russian oil shipments to India fell 19.35 per cent year-on-year—marking a second straight month of decline, even before fresh US sanctions took hold.

The drop suggests more than short-term turbulence. Russia’s cut-rate oil once gave it an edge, but that advantage is slipping. India is adjusting—upping purchases from the US and eyeing a broader revival of Middle Eastern supply lines.

India will keep buying Russian barrels as long as prices remain attractive. But the bigger picture is clear: diversification is no longer just a fallback—it’s the playbook. New Delhi’s oil diplomacy is entering a new phase—less reliant, more agile, and built for a world where price, politics, and supply chains are all in flux.

While Russian shipments remain dominant, US crude imports surged 15 per cent between April and January in FY25—the fastest growth among New Delhi’s top suppliers. Moscow may still lead, but Washington is fast evolving from backup option to strategic energy partner.

Even before US sanctions on Russia took effect in January, India pre-emptively trimmed crude imports from Iraq and Saudi Arabia—each down nearly 10 per cent in value and volume—marking a deliberate shift rather than a price reaction.

This recalibration allowed Indian refiners to boost flows from the US while exploring new supply lines in Latin America and Africa. By reducing dependence not just on Russia but also traditional Gulf partners, India demonstrated agility rare among major oil importers.

India is poised to secure more long-term deals with US exporters and court non-traditional suppliers. Meanwhile, Gulf producers may offer sweeter terms to retain market share. In a world of splintering oil alliances, India’s early pivot positions it to shape a more resilient, self-directed energy strategy.

The US Treasury’s January sanctions on Russian oil majors Gazprom Neft and Surgutneftegas, along with 183 crude-carrying vessels, have sent shockwaves through global energy markets—India included. Some sanctioned ships were likely headed for Indian refiners, while restrictions on a major Russian insurer further constricted trade flows.

Although Indian importers scrambled to reroute supplies, a senior official acknowledged that heightened volatility in global oil markets has made the task more complex. The disruption highlights India’s pressing need to diversify energy sources and build more resilient supply chains amid mounting geopolitical risks.