India could double US energy purchases this year to offset tariff threat

India's crude oil imports from the US hit a two-year high in April, with US market share tripling since February, as both nations work towards a trade deal to rationalise import tariffs

(This report has been updated)  India’s purchase of US crude oil will pick up in 2025 and could easily double from a year earlier, government and industry officials said, strengthening New Delhi's bargaining position with Washington even as it races to conclude a bilateral trade agreement with the United States.

 

The surge comes in the wake of the then-incoming Donald Trump administration's announcement that it would consider hiking tariffs on a reciprocal basis, and pushed some countries, especially those with large trade surpluses with the US, to buy more of its energy. India runs a sizeable $41 billion trade surplus with America, which is still much lower compared to China and the European Union.

 

 India’s crude oil purchases from the US surged to their highest level in over two years in April and the market share of US oil tripled from February, ship tracking data showed--the share of US oil in India's crude import basket jumped to 9 percent this month as of today's shipping data compared to just 3 percent in February. Separately, oil companies are also pressing the pedal on sourcing liquefied natural gas (LNG) from US projects, industry sources said.

 

State-run oil companies are leading the charge for New Delhi by increasing US energy purchases — after private refiners turned more cautious, weighing profitability and margins, industry officials said.

 

Initial trade numbers spell it out. State-run refiners, led by Indian Oil and Bharat Petroleum, accounted for over 70 per cent of US crude to India in April at 313,000 barrels per day (bpd), with Reliance Industries accounting for the rest, initial estimates from Kpler's ship tracking data accessed by Business Standard show. State refiners opt for higher quality, more expensive grades, while Reliance buys dirty, lower quality, discounted oils with higher sulphur and acid content.

 

US oil purchases averaged 437,000 bpd this month until today, according to estimates by Paris-based market intelligence agency Kpler. Kpler’s algorithms predict May volumes at around 370,000 bpd, though it is a bit early to call. This compares to 262,000 bpd of US crude oil imports in March and 145,000 bpd in February. India imported as much as 592,000 bpd in February 2021 during Trump’s first term, the data showed.

 

Oil value

 

US crude oil imports are a low-hanging fruit for India — at an average $70 per barrel on a free-on-board basis, the crude in April is valued close to $1 billion. If India imports US oil at a similar pace this year, purchases will more than double in value terms from a year earlier to over $10 billion, a fourth of the US trade deficit. So is trade in Liquefied Petroleum Gas (LPG) — a blend of propane and butane used as cooking fuel and currently supplied by West Asian nations. India can expand purchases of US fuel immediately after China imposed high tariffs on US LPG imports, a refining official said. India imports around $12 billion of LPG annually, according to customs data.

 

India imports over $10 billion worth of US crude oil, fuels, and LNG annually — a number that can easily double given the appetite for US fuels by Indian state-run oil companies and the geopolitical and tariff turmoil generated by the Trump administration, industry and government officials said. Indian imports of US oil in 2025 averaged 266,000 bpd — the third highest on record after 415,000 bpd in 2021 and 300,000 bpd in 2022. Purchases averaged 199,000 bpd in 2024.

 

State-run refiners are substituting purchases of light, sweet grades from West Africa, Brazil, Russia, or the Middle East with similar US West Texas Intermediate (WTI) Midland grades and private refiners like Reliance are replacing heavy sour Venezuelan grades with similar types such as Cold Lake Blend from North America, refining sources said. Refining officials said that US crudes are competitive, especially after WTI declined below $60 per barrel, making it a viable purchase despite higher transport costs and shipping times..

 

 LPG, widely used in India for cooking, also has immense trade potential with the US, a senior official from a state refiner said. India imports over 60 per cent of its LPG, most of it from West Asia, with US supplies marginal at best. But retaliatory tariffs by China on US imports — of up to 125 per cent — open up the US LPG market for India, the official said. China’s response to the US has had a significant impact on LPG trade, with global prices falling quickly, said Sparta Commodities in a note.

 

US LNG

 

Also, Indian state oil companies have advanced efforts to source as much as a combined 5–6 million tonnes (MT) of Liquefied Natural Gas (LNG) from the US, virtually doubling such term purchases, officials at state-run oil companies told Business Standard.

 

Gail issued an expression of interest soliciting responses by April 28 to source 1 MT of LNG annually from a US liquefaction project for 15–25 years. It also showed interest in taking a 10–26 per cent stake in an LNG producing venture, according to Gail’s tender document. The company has a combined 5.8 million tonnes a year of US LNG tied up in two term contracts of 20-year duration.

 

 Indian Oil, Bharat Petroleum, Petronet LNG, and Hindustan Petroleum have expressed interest in importing US LNG to diversify their portfolios, industry officials said. Currently, these companies buy LNG linked to crude oil; US LNG is typically priced off a local gas pricing benchmark, Henry Hub