What Happened
- India's growing energy needs and the importance of diversifying energy suppliers were highlighted in the context of the India-US interim trade deal.
- India is the fastest-growing large economy with energy demand rising at approximately 7% annually.
- The interim trade deal with the US aims to boost bilateral trade to $500 billion by 2030, with energy imports (crude oil, LNG, LPG) forming a significant component.
- Having more suppliers would help India secure crude oil at more competitive prices through market competition.
- India intends to purchase $500 billion worth of US energy products, aircraft, technology, and coking coal over the next 5 years.
Static Topic Bridges
India's Energy Security Architecture
Energy security for India encompasses four dimensions: availability, accessibility, affordability, and sustainability. India imports approximately 89% of its crude oil, approximately 50% of its natural gas, and a significant share of its coal requirements. The Integrated Energy Policy (IEP), recommended by the Planning Commission (2006), outlined a strategy for energy security through diversification of sources, fuels, and supply routes. The India Energy Security Scenarios (IESS 2047), developed by NITI Aayog, models India's energy future under different pathways.
- India's primary energy consumption: approximately 930 MTOE (million tonnes of oil equivalent) in 2024
- Energy mix (2024): coal (55%), oil (27%), natural gas (6%), renewables (8%), nuclear (1%), hydro (3%)
- Crude oil import sources: Russia (approximately 34%), Iraq (approximately 20%), Saudi Arabia (approximately 15%), UAE (approximately 8-10%)
- LNG import sources: Qatar (approximately 40%), US (growing), UAE, Australia
- India's refining capacity: approximately 254 MTPA (5th largest globally); major refiners: IOC, BPCL, HPCL, RIL, Nayara
- Strategic Petroleum Reserves: 5.33 million tonnes (approximately 9.5 days of import cover)
Connection to this news: India's decision to include energy in the US trade deal reflects an energy security strategy of avoiding over-dependence on any single supplier. The concentration risk from Russia (34% of crude imports) has been exposed by the impact of Western sanctions and geopolitical pressure.
India-US Energy Partnership and LNG Trade
The India-US Strategic Energy Partnership (SEP), launched in April 2018, covers oil and gas, renewable energy, sustainable growth, and power and energy efficiency. US LNG exports to India have grown significantly since the commissioning of Cheniere Energy's Sabine Pass terminal. India's LNG import capacity has expanded to approximately 47.5 MTPA across 7 regasification terminals (Dahej, Hazira, Dabhol, Kochi, Ennore, Mundra, Jaigad).
- India-US SEP: launched April 2018; expanded at Houston energy summit; covers 4 pillars
- US LNG exports to India: growing; long-term contracts with GAIL (3.5 MTPA from Sabine Pass)
- India's LNG regasification capacity: approximately 47.5 MTPA across 7 terminals
- Petronet LNG (Dahej): India's largest LNG terminal at 17.5 MTPA; long-term Qatar contract
- India's gas grid: approximately 22,000 km (target: 35,000 km under National Gas Grid)
- City Gas Distribution (CGD): 295 Geographical Areas licenced by PNGRB across 630 districts
Connection to this news: The trade deal's energy component builds on the existing India-US SEP, with the potential for long-term LNG supply contracts that could anchor India's gas infrastructure expansion and support the transition from coal and oil to cleaner natural gas.
Hedging Oil Price Volatility Through Supplier Competition
India's oil import bill is highly sensitive to global crude oil prices and supply disruptions. The Indian basket crude price fluctuated from $40 (2020) to $110 (2022) to approximately $70 (2026). By diversifying suppliers across multiple geographies -- Middle East (Saudi Arabia, Iraq, UAE), Central Asia (Russia, Kazakhstan), Americas (US, Brazil, Guyana), and Africa (Nigeria, Angola) -- India creates buyer competition that helps negotiate better terms. Additionally, different crude grades (light sweet, heavy sour) from different regions allow Indian refineries to optimise their crude mix.
- Indian basket crude price (2025-26 average): approximately $70-75 per barrel
- India's oil import bill sensitivity: every $10/barrel increase adds approximately $15-17 billion to the import bill
- Indian refineries: configured for diverse crude grades; can process light, medium, and heavy crudes
- Oil marketing companies: IOC, BPCL, HPCL (government); RIL, Nayara (private)
- Crude oil pricing benchmarks: Brent (global), WTI (US), Dubai/Oman (Asian marker)
- India's energy import bill: approximately $200 billion (2024-25)
Connection to this news: Adding US crude oil as a significant supply source -- alongside traditional Middle Eastern and Russian suppliers -- strengthens India's bargaining position in price negotiations and reduces vulnerability to OPEC+ production cut decisions or geopolitical supply disruptions.
Key Facts & Data
- India's energy demand growth rate: approximately 7% annually
- Crude oil import dependency: approximately 89%
- India-US trade target: $500 billion by 2030
- India's planned US purchases over 5 years: $500 billion (energy, aircraft, tech, coking coal)
- India's daily crude oil consumption: approximately 5.5 million bpd
- LNG regasification capacity: approximately 47.5 MTPA across 7 terminals
- Strategic Petroleum Reserves: 5.33 million tonnes (approximately 9.5 days of import cover)
- India's refining capacity: approximately 254 MTPA (5th largest globally)