NOIDA, INDIA – APRIL 16: Indian patrons queue to refill their empty liquefied petroleum fuel (LPG) cylinders close to a fuel company workplace in Noida, on the outskirts of New Delhi, India, on April 16, 2026. (Picture by Amarjeet Kumar Singh/Anadolu by way of Getty Photos)
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The US is stepping up efforts to promote oil and fuel to India because the world’s third-largest vitality market grapples with provide disruptions from the Center East and finds its options shrinking after Washington ended waivers for Iranian and Russian crude.
However changing oil and fuel from the Gulf nations and Russia with American vitality is a tough selection for India, specialists mentioned.
Excessive freight prices, refinery infrastructure that’s not totally suitable with U.S. crude, and longer supply occasions are among the many key obstacles to deepening vitality commerce with Washington.
U.S. push for vitality gross sales
On Wednesday, U.S. Ambassador to India Sergio Gor met India’s Minister of Petroleum and Pure Fuel Hardeep Singh Puri to debate “vitality safety and unlocking new alternatives for accelerating progress.”
Whereas Puri didn’t disclose particulars of the discussions, Gor mentioned in a put up on X that the talks had been centered on “increasing entry to dependable American vitality” to India and “supporting long-term vitality safety and variety for each nations.”
Gor isn’t the primary U.S. official to press India to purchase extra American vitality. U.S. President Donald Trump has raised the difficulty repeatedly, at occasions even urging India to buy Venezuelan oil provided by Washington.
Disruptions within the Strait of Hormuz threaten about 50% of India’s crude imports, 60% of its liquefied pure fuel, and virtually all liquefied petroleum fuel (LPG) provides, in response to a March 2 report by Citi. The influence is already being felt domestically.
Final month, whilst U.S. Treasury Secretary Scott Bessent introduced a 30-day waiver permitting Indian refiners to proceed shopping for Russian oil, he mentioned India was an “important associate of the US” and that Washington anticipated New Delhi to ramp up purchases of U.S. crude.
On Thursday, Bessent mentioned the U.S. is not going to be renewing the “common license” on Russian or Iranian oil, and a earlier waiver was meant just for sanctioned oil “that was on the water previous to March eleventh.”
This has deepened New Delhi’s vitality worries, eradicating key sources of vitality provide as world markets stay tight.
In February, as a part of a broader U.S.-India commerce deal, New Delhi mentioned it “intends” to import extra than $500 billion value of U.S. vitality, info and communication know-how, coal, and different merchandise.
With India dealing with an acute vitality provide crunch, Washington is now urgent for these intentions to show into near-term commitments.
However India is a web vitality importer, and gasoline accounts for a significant share of its import invoice. Any sustained rise in vitality costs dangers widening the present account deficit and undermining macroeconomic stability.
Provide crunch
The U.S. needs India to signal an vitality deal sooner reasonably than later, mentioned Mukesh Sahdev, chief oil analyst at vitality intelligence agency XAnalysts.
India is in a “aggravating state of affairs” because it scrambles to safe oil and fuel provides, and if Washington seals a deal earlier than the battle within the Center East eases, it might extract greater costs and extra favorable phrases, he mentioned.
For the reason that begin of the Iran battle, the federal government has prioritized LPG provides for households — the place it represents the first cooking gasoline — over industrial use. This has led to the everlasting closure of round 10% of eating places and eateries, in response to a report launched by the PHD Chamber of Commerce and Trade business physique on Thursday.
Following experiences that it could take India 3-4 years to revive LPG provide to pre-Iran battle ranges, the Ministry of Petroleum and Pure Fuel on Thursday shared particulars of the nation’s LPG inventory.
India’s every day LPG demand stands at about 80,000 metric tons, it mentioned in a put up of X, noting that home provide accounts for less than round 50,000 tons. To bridge the hole between home provide and weaker imports from the Gulf, the ministry mentioned it has secured 800,000 metric tons of “assured import cargoes” that are en route from the U.S., Norway, Canada, Algeria, and Russia.
Deal mismatch
The U.S. is eager to export LPG — a mixture of propane and butane — to India because it builds up extra stockpiles, specialists mentioned. China had been a significant purchaser of U.S. propane, however within the absence of a commerce deal between Beijing and Washington, the U.S. is looking for new markets.
That dynamic doesn’t lengthen as simply to liquefied pure fuel, the place India is a extremely price-sensitive purchaser and may swap to coal for energy era and fertilizer manufacturing if fuel costs rise, Sahdev mentioned.
India is already rationing LNG provides, in response to a be aware S&P World Vitality shared with CNBC, which mentioned energy era, refining, and petrochemicals are lower-priority sectors and due to this fact extra uncovered to curtailments. Fertilizers, metropolis fuel for residential and industrial use, and transport are amongst higher-priority sectors, it mentioned.
Most of India’s crude oil imports nonetheless come from Russia, Saudi Arabia, Iraq, the U.A.E, and Kuwait. With sanctions as soon as once more limiting entry to Russian oil and Center East disruptions squeezing provide, India’s choices are narrowing.
Nonetheless, large-scale imports of U.S. crude are unlikely, specialists mentioned, citing a mismatch between crude high quality, refinery configurations, and India’s demand necessities. India’s refineries are additionally geared to maximise diesel output, making U.S. crude much less enticing.
There may be larger potential for U.S. exports of LNG, LPG, ethane, and propane to India, mentioned Pankaj Srivastava, senior vice chairman at vitality analysis agency Rystad Vitality.
“With infrastructure within the Center East — significantly in Qatar — broken, LNG and LPG provide reliability may very well be in query, and the U.S. can emerge as a pure associate,” he mentioned.
However he cautioned that imports would stay costly as a result of Center East battle and broader world provide shocks. With out significant reductions, he added, “the economics is not going to favor U.S. sourcing.”
