India’s strategic oil play: Balancing Russian discounts and US ties for long-term energy security

By: Shantanu Bhattacharji

New Delhi’s dual approach—capitalising on discounted Russian oil while strengthening energy ties with the US—reflects a strategic effort to balance cost efficiency, energy security, and geopolitical considerations.

India is poised to increase energy imports from the US, Petroleum and Natural Gas Minister Hardeep Singh Puri said on January 21, citing expanded supplier diversification from 27 to 39 countries in recent years. “If more oil comes in, this is something that we welcome,” he added at an auto industry event.

The announcement follows a US policy shift under President Donald Trump’s national energy emergency, which aims to boost oil and gas production by easing environmental restrictions and fast-tracking permits for energy infrastructure.

For India, the world’s third-largest crude importer, closer energy ties with America align with efforts to bolster energy security and reduce dependence on traditional suppliers. US crude, which accounted for 12 per cent of India’s imports in 2024, up from 9 per cent in 2023, supports this strategy, offering high-quality light crude to optimise refinery yields amid rising domestic demand.

Meanwhile, Russia remained New Delhi’s top supplier, meeting over 40 per cent of its crude needs in 2024, thanks to steep discounts averaging $10–12 per barrel below Brent crude. Moscow’s competitive pricing helped cap India’s overall import costs despite global volatility.

US crude, though costlier, plays a strategic role by diversifying India’s energy mix and mitigating risks tied to geopolitically sensitive regions. Experts say India’s dual approach—leveraging Russian price cuts while deepening US ties—reflects a calculated bid to balance cost efficiency, energy security, and geopolitical interests.

Analysts say India’s adaptive crude sourcing strategy—leveraging Russian price cuts while strengthening US relations—shows a deliberate effort to secure energy supplies and navigate geopolitical risks in a volatile global oil market. By diversifying its crude sources, New Delhi is able to balance cost savings with strategic alliances, lowering reliance on any single region and easing potential disruptions. This approach emphasises India’s focus on long-term energy security and its ability to adapt to shifting global dynamics.

Trump’s victory is being viewed positively by the petroleum ministry, with officials expecting a rise in US crude imports from April. The Trump administration’s removal of export barriers and authorisation of natural gas quotas are likely to drive this increase.

US shale oil offers a strategic alternative to New Delhi’s current dependence on Russian crude, which faces international sanctions. America is well-positioned to expand its crude exports to India, diversifying supply sources and enhancing energy security.

Despite the Biden administration’s focus on cleaner energy, Washington has remained New Delhi’s fifth-largest crude supplier for two consecutive years, though its ranking has dropped since FY22.

Analysts indicate that Asian buyers, including India, are poised to take advantage of the attractively priced US crude, which has become more competitive in the global market. America’s domestic oil production has continued to grow rapidly, intensifying competition with Organisation of the Petroleum Exporting Countries (OPEC) suppliers. With increasing US crude production and exports, the US is positioned to compete more aggressively with OPEC exporters in Asia.

In January of last year, the Biden administration halted decisions on liquefied natural gas (LNG) exports to countries without a free trade agreement (FTA) with the US, impacting India, which lacks such a pact.

The US is the world’s largest LNG exporter, with shipments expected to double by the end of the decade. The US Energy Information Administration (EIA) reports that LNG exports to India surged in early 2020 as the Covid-19 pandemic altered global energy consumption patterns.

Monthly LNG shipments to India peaked at 28,259 million cubic feet in May 2021 before declining. By October 2023, volumes had fallen to 13,698 million cubic feet, and the EIA ceased monthly data updates. Despite fluctuations, India’s rising LNG imports from the US highlight the deepening energy ties between the two nations, even as trade policies continue to evolve.