India Boosts U.S. Oil Imports: A Move to Strengthen Energy Security & Trade Ties

India has committed to increasing its oil and gas imports from the U.S. to enhance energy security and trade relations. Imports could rise from $15 billion to $25 billion, with U.S. crude exports to India reaching 3,57,000 bpd in February. India, which relies on imports for over 85% of its crude needs, aims to diversify supply sources. Strengthening energy ties with the U.S. supports the goal of doubling bilateral trade to $500 billion in five years. Currently, trade favors India, with a $45.7 billion goods trade surplus. Experts see this move as crucial for India’s long-term energy strategy.

India Boosts U.S. Oil Imports: A Move to Strengthen Energy Security & Trade Ties

India has pledged to increase its oil and natural gas imports from the U.S., following Prime Minister Narendra Modi’s meeting with U.S. President Donald Trump in February in Washington. The decision comes amid tariff concerns and aims to strengthen energy ties between the two nations.

According to Foreign Secretary Vikram Misri, India’s energy imports from the U.S. could rise from $15 billion last year to $25 billion in the near future. A Reuters report highlighted that U.S. crude exports to India reached approximately 3,57,000 barrels per day (bpd) in February, a significant jump from around 2,21,000 bpd the previous year.

As the world’s third-largest oil importer and consumer, India relies on imports for over 85% of its crude oil needs, making supply diversification essential. Increasing purchases from the U.S. not only enhances energy security but also supports the broader goal of doubling bilateral trade to $500 billion within five years.

Currently, trade between the two nations favors India, with a goods trade deficit of $45.7 billion in 2024—a 5.4% rise from 2023, according to the Office of the United States Trade Representative. Gauri Jauhar, Executive Director at S&P Global Commodity Insights, noted that expanding oil and gas imports from the U.S. will contribute to India’s long-term energy supply diversification.

India Enhances Energy Security and Trade Relations Through Increased U.S. Oil Imports

In a strategic move to bolster energy security and deepen economic collaboration, India has committed to ramping up its imports of oil and natural gas from the United States. This decision follows a pivotal meeting between Prime Minister Narendra Modi and former U.S. President Donald Trump in February, underscoring a mutual effort to strengthen bilateral ties amid evolving global trade dynamics. By prioritizing diversification of energy sources and addressing trade imbalances, the initiative aligns with India’s long-term goals while fostering a stronger partnership with one of its key global allies.

A Strategic Shift in Energy Procurement

India, the world’s third-largest oil importer and consumer, relies on foreign supplies for over 85% of its crude oil needs. Historically, the nation has depended heavily on Middle Eastern producers, but recent geopolitical uncertainties and supply chain vulnerabilities have prompted a reevaluation of sourcing strategies. The U.S., now a leading global oil producer due to its shale revolution, emerges as a reliable alternative.

Foreign Secretary Vikram Misri highlighted that India’s energy imports from the U.S. could surge from $15 billion in 2023 to $25 billion in the near term—a 66% increase. Data from Reuters reveals U.S. crude exports to India jumped to approximately 357,000 barrels per day (bpd) in February 2024, up from 221,000 bpd the previous year, signaling a rapid escalation in trade volumes.

Strengthening Energy Security

For India, diversifying energy suppliers is not merely an economic decision but a strategic imperative. Overreliance on a single region exposes the country to supply disruptions, price volatility, and geopolitical risks.

By integrating U.S. oil and gas into its energy mix, India mitigates these challenges while securing stable, long-term supplies. Gauri Jauhar, Executive Director at S&P Global Commodity Insights, emphasizes that expanding imports from the U.S. supports India’s broader agenda of energy diversification, ensuring resilience against global market fluctuations.

The U.S. offers additional advantages, including flexible contract terms and the ability to scale exports rapidly. Unlike traditional suppliers bound by OPEC quotas, American producers operate in a competitive market, enabling India to negotiate favorable terms. This flexibility is critical as India navigates rising domestic demand, driven by urbanization, industrialization, and a growing middle class.

Boosting Bilateral Trade and Addressing Imbalances

Beyond energy security, the move aligns with ambitions to elevate U.S.-India trade to $500 billion within five years. Currently, bilateral trade tilts in India’s favor, with the U.S. goods trade deficit reaching $45.7 billion in 2024—a 5.4% increase from 2023, per the U.S. Trade Representative. By amplifying energy purchases, India can help balance this deficit, easing trade tensions and fostering goodwill.

Energy exports also complement other sectors where the U.S. holds a competitive edge, such as technology, defense, and agriculture. This synergy creates a multifaceted trade relationship, reducing dependency on single industries and promoting sustainable economic growth. For the U.S., expanding energy exports to India opens a lucrative market, reinforcing its position as a global energy leader while supporting domestic jobs and investments.

Navigating Tariff Concerns and Geopolitics

The commitment to boost energy trade arrives amid lingering tariff disputes and protectionist policies. Both nations have previously imposed levies on select goods, highlighting the need for cooperative frameworks. Energy collaboration could serve as a stabilizing force, incentivizing dialogue on broader trade issues. Moreover, as the U.S. seeks to counterbalance China’s influence in Asia, strengthening ties with India—a regional power—holds geopolitical significance.

Future Prospects and Challenges

While the surge in U.S. energy imports marks a positive step, challenges persist. Logistics, such as shipping costs and infrastructure, may impact pricing competitiveness compared to Middle Eastern crude. Additionally, India must balance its relationships with traditional suppliers like Saudi Arabia and Russia, who remain pivotal to its energy matrix.

Nevertheless, the partnership reflects a forward-looking approach. Investments in renewable energy and liquefied natural gas (LNG) infrastructure further signal a commitment to sustainable growth. For instance, Indian firms have already inked multi-year LNG contracts with U.S. suppliers, ensuring a steady flow of cleaner energy sources.

Conclusion

India’s decision to amplify U.S. oil and gas imports underscores a pragmatic strategy to fortify energy security while nurturing a dynamic trade alliance. By addressing supply risks, trade imbalances, and geopolitical priorities, the initiative lays the groundwork for a resilient and mutually beneficial partnership. As both nations navigate a complex global landscape, collaboration in energy and beyond promises to unlock new opportunities, cementing their roles as pivotal players in the 21st-century economy.