Economics trumps politics: India's US oil, LNG imports slump sharply

India is guided solely by economics when sourcing oil and LNG rather than geopolitics, and the government does not interfere in decisions by state-oil companies, September data shows

Shipments of crude oil from the US to India dropped by an average of 40 per cent in August and September—coinciding with US President Donald Trump ratcheting up pressure on India—from July levels. Senior industry officials told Business Standard that when it comes to oil and gas, "economics trumps politics".

 

Imports of LNG from the US declined by 41 per cent last month from a year earlier and by 23 per cent month-on-month.

 

Deliveries of US crude oil in August and September averaged 220,000 barrels per day compared to 364,000 bpd in July, according to data from maritime intelligence agency Kpler. Imports in September were 30,000 bpd lower year-on-year and 23,000 bpd lower month-on-month. US supplies are contracted 45–60 days in advance, which means July is typically contracted in May/June and August/September arrivals are ordered in July/August. Trump announced plans for secondary tariffs on India in July, which came into effect at the end of August.

 

LNG shipments from the US to India shrank to 0.27 million tonnes last month from 0.46 million tonnes a year earlier and 0.35 million tonnes in August, the data showed. Nine months into 2025, US purchases at 2 million tonnes this year are well below the 5 million tonnes imported in 2024. State-run distributor GAIL, the biggest purchaser of US LNG, which had signed term contracts for a little less than 6 million tonnes a year a decade ago, has found it more profitable to swap its US cargoes than bring them to India, an industry official said.

 

Russian oil was not spared either, as Indian refiners scoured the world for the cheapest supplies. Indian imports of Russian oil in September at 1.6 million bpd were the lowest since February and 24 per cent below the June high of 2 million bpd.

 

“I would not expect Indian refiners to pre-emptively boost US imports with a view to helping oil New Delhi-Washington trade talks,” said Vandana Hari, a Singapore-based leading oil expert. “That might happen if certain targets are agreed as part of a deal and an instruction comes down to the PSUs from the government. Until then, economics trumps everything else by default,” Hari, founder of Vanda Insights, added.

 

Two top traders from state-run refiners, echoing Oil Minister Hardeep Puri’s comments, said that India is guided by economics when sourcing oil. Hindustan Petroleum’s new CEO Vikas Kaushal said in the refiner’s latest earnings call that the government does not interfere in sourcing decisions.

 

Commerce and Industry Minister Piyush Goyal said late last month at an event in New York that the government aims to expand trade in energy products with the US over the coming years. “We expect to increase our trade with the US in energy products in the years to come.”

 

For now, Indian energy purchases do not reflect such public postures. India’s decision to exercise sovereignty in crude oil purchases will not be constrained by a third country—the only time it stops making purchases is if the country is sanctioned by the United Nations, like in the case of Iran, a top government official said.

Expensive US oil

US oil has been among the most expensive in the January–July period of 2025, for which final data is available from Indian customs, averaging over $79 per barrel on a delivered basis—$8 more than discounted Russian oil and $3 per barrel over Saudi Arabian supplies.

 

Russian oil has not delivered much value this year either, at least to state-run refiners, officials said. For instance, Hindustan Petroleum did not buy any Russian oil in September compared to 220,000 bpd a year earlier. State-oil refiners have shrunk their dependence on Russian oil this year to 49 per cent from 61 per cent a year earlier. “Reliance secures better discounts than us because of its term contract with Russian state-owned Rosneft,” an official from a state refiner said. Reliance declined to comment on market matters.

 

But that does not mean India buys only the cheapest oil, another official from a state refiner explained. Refineries need a blend of expensive sweet and cheaper sour grades depending on their configuration and product slate, the official said. Energy security also dictates paying a premium for certain grades.

 

To be fair, US crude oil purchases have expanded this year—volumes jumped by 39 per cent until September to average 278,000 bpd. Still, this is well below a record 415,000 bpd in 2021 when Washington’s pressure on New Delhi to buy US crude was much lower than current levels. The US then accounted for 10 per cent of India’s crude imports compared to less than 6 per cent this year.

 

Shipments from the US and Latin America are a long haul, given the 45 days it takes to reach India, going around the Horn of Africa to avoid Houthi rebels circling the Suez Canal, usually the fastest route to India from the West. Russian oil takes 25–30 days, while supplies from India’s traditional suppliers in the Gulf take less than a week, industry officials said.

 

Reliance and Nayara accounted for nearly 64 per cent of Russian oil supplies in September at over 1 million bpd compared to the average share of private refiners last year at under 40 per cent. Nayara Energy, which lost access to contracted shipments from Iraq and Saudi Arabia after being targeted by European Union sanctions in July, bought the most from Russia since March 2024.