India's growing energy demand is becoming a battleground for fierce competition between its two major geopolitical rivals, the United States and Russia. The South Asian nation is the world's third-largest importer of crude oil, fourth-largest buyer of liquefied natural gas (LNG), and second-largest importer of liquefied petroleum gas (LPG). Since the outbreak of the Iran-Iraq War, Russia has become India's largest crude oil supplier, while the United States has risen to become India's largest supplier of LNG and LPG. Both countries are seeking a larger share of the world's fastest-growing major economy.

Russia remains India's top crude oil supplier

Russian President Vladimir Putin stated clearly on Monday (August 24) that "Russia is expanding its exports to India and is prepared to continue doing so." According to data from energy analytics firm Kpler, Russia is currently India's largest crude oil supplier. India's crude oil imports from Russia reached a record high of approximately 2.8 million barrels per day in both June and July, accounting for more than 50% of the country's total oil imports. Entering August, influenced by factors such as the Ukrainian drone attack on Russian export infrastructure and increased purchases by major Asian powers, imports are expected to drop to approximately 2 million barrels per day. Sumit Ritolia, senior modeling manager at Kpler, predicts that India's purchases from Russia will stabilize at slightly above 2 million barrels per day in the future. According to the latest Indian trade data, Russian exports to India increased by nearly 60% year-on-year between April and July. In the fiscal year ending March 2026, Russia will account for 43.25% of India's crude oil imports. Bilateral merchandise trade between India and Russia more than quadrupled during this period, reaching nearly $60 billion, but the trade deficit has widened to over $50 billion.

The United States has emerged as a strong force in the LPG and LNG markets.

The rise of the United States in India's energy landscape is equally noteworthy. In the LPG sector, the US has overtaken traditional Gulf suppliers such as the UAE, Qatar, and Saudi Arabia to become India's largest LPG supplier. According to Kpler data, India imported a record 912,400 tons of LPG from the US in July. August imports were approximately 620,000 tons. US supplies now account for over 73% of India's total LPG imports. In contrast, the UAE's LPG imports fell to approximately 140,000 tons in August, Qatar's to approximately 60,000 tons, and Saudi Arabia did not supply LPG to India in either July or August. In the LNG sector, the US has also risen rapidly. From March to May 2026, the US surpassed Qatar for the first time to become India's largest LNG supplier, accounting for more than a quarter of India's cumulative LNG imports. From May to July, India's LNG imports increased by 15.4% year-on-year to 7.08 million tons. The US supplied 2.1 million tons during this period. India's LNG imports in July reached $1.2 billion, a year-on-year increase of 9.1%. U.S. Ambassador to India Sergio Gor stated that the U.S. energy supply to India is "unparalleled," with Washington's LPG and LNG supplies to India increasing by more than 60% year-on-year.

Venezuelan crude oil becomes an alternative.

The United States has been pushing New Delhi to purchase Venezuelan crude oil as a substitute for Russian crude. This strategy is working. According to Kpler data, India's crude oil imports from Venezuela rose from zero in March to approximately 383,000 barrels per day in August (other data shows that it reached 444,000 barrels per day in August). Combined with US crude oil imports, these two sources accounted for about 11% of India's crude oil imports during the same period. Venezuela has become India's fourth largest crude oil supplier. Experts point out that Indian refineries cannot directly substitute Russian or Middle Eastern crude oil with US crude because US crude is "relatively light," while many Indian refineries are configured to process medium and heavy crude. Venezuelan crude, being "heavier," solves this problem. Kpler's Ritolia stated, "If you combine US and Venezuelan crude, the importance of the Americas in India's crude oil purchasing basket is rising."

The Dilemma of Tariff Negotiations and Energy Security

Last August, Washington imposed a 25% punitive tariff on Indian imports. This February, the US and India reached a trade agreement, with the US reducing tariffs on Indian goods from 50% to 18% and removing the 25% punitive tariff imposed on India's purchases of Russian oil. In exchange, India pledged to reduce its purchases of Russian oil and increase its purchases of US energy products. According to a joint statement, India plans to purchase $500 billion worth of US energy products, aircraft, and spare parts over the next five years. However, a new threat is looming. On August 7, the US Senate passed the Graham Act by a vote of 86 to 11, authorizing the president to impose a maximum 500% ad valorem tariff on Russian goods imported into the US, and a maximum 100% ad valorem tariff on goods imported into the US from the top five importers of Russian crude oil or natural gas. The bill will be submitted to the House of Representatives for final approval in September. The last time India faced a 25% punitive tariff, its imports from Moscow fell by more than 13% in the fiscal year ending March 2026, while US exports to India rose by nearly 16%. Pankaj Srivastava, Senior Vice President of Commodity Markets at Rystad Energy, pointed out that the Middle East—particularly Qatar, the UAE, and Saudi Arabia—traditionally dominated India's LPG imports due to logistical advantages, but the war with Iran undermined this advantage. Since the outbreak of the war, the United States has become the leading supplier. However, experts warn that replacing Russian crude oil with Russian oil is "technically feasible, but economically and politically risky" for India given the current global tight crude oil supply. Ritolia stated that it does not currently expect a reduction in Russian imports. India insists that ensuring energy security is the sole driver of its energy procurement.

Editor's Summary

The power struggle between the US and Russia in the Indian energy market is at a critical juncture. Russia, leveraging its geographical proximity and price advantages, firmly maintains its dominant position in Indian crude oil supply, with a market share exceeding 50% in June and July highlighting its irreplaceable status. The US, on the other hand, has rapidly replaced traditional Gulf suppliers in the LPG and LNG sectors through its production advantages and bilateral trade leverage, with a 73% LPG market share signifying a structural shift in the energy trade landscape. Venezuela's rapid rise as a "middle option" (becoming the fourth largest supplier in August) reflects the US's strategic intention to promote the de-Russification of India's energy sector. However, the threat of 100% secondary tariffs imposed by the Graham Act, scheduled for a House vote in September, will force India to make a more difficult trade-off between energy security and trade interests. The fundamentally tight global crude oil supply means that this game is unlikely to be resolved in the short term.

Frequently Asked Questions

Q: Why does India adopt a balancing strategy between the US and Russia? India prioritizes energy security over diplomatic considerations. As the world's third-largest crude oil importer, India relies on imports for nearly 88% of its crude oil needs. Russian crude oil prices are competitive, and Indian refineries are well-equipped to process Russian medium and heavy crude. Meanwhile, the US is a significant trading partner and source of investment for India. India navigates between these two countries to maximize its energy security and economic benefits. Q: Why has the US quickly become India's largest LPG and LNG supplier? The Iran-Iraq War disrupted traffic in the Strait of Hormuz, a waterway that carries nearly 90% of India's LPG imports and 60% of its LNG imports. The supply capacity of traditional Gulf suppliers (Qatar, Saudi Arabia, and the UAE) has significantly decreased. Simultaneously, the US shale gas revolution has created ample LPG and LNG export capacity, and coupled with the impetus of the US-India bilateral energy agreement, the US has quickly filled the market gap. Q: What does the Graham Act mean for India? This act authorizes the US President to impose up to 100% ad valorem tariffs on goods imported into the US from Russia's top five crude oil or natural gas importers. As one of the major buyers of Russian crude oil, India faces severe risks of secondary sanctions. If the bill is ultimately passed, Indian exports to the US could be subject to hefty tariffs, severely impacting India's trade with the US. The bill has already passed the Senate vote and is expected to be submitted to the House of Representatives for consideration in early September. Q: Can India completely replace Russian crude oil with Venezuelan crude oil? It's unlikely in the short term. Venezuela's crude oil exports to India in August were approximately 383,000 to 444,000 barrels per day, while Russia's exports to India during the same period were approximately 2 million barrels per day. There is a difference of orders of magnitude. Furthermore, Venezuela's crude oil production is constrained by its aging domestic infrastructure, limiting further production growth. Kpler experts point out that completely replacing Russian crude oil is "technically feasible, but economically and politically risky." Q: Why is it difficult for India to replace Russian crude oil with US crude oil? This is a refinery configuration issue. US crude oil is a "relatively light" grade, while many Indian refineries are designed to process medium and heavy crude oil. Venezuelan "heavier" crude oil precisely addresses this issue. Therefore, while pushing India to reduce its imports of Russian oil, the United States is also actively facilitating the flow of Venezuelan crude oil into the Indian market, forming a dual-track strategy of "US political pressure + Venezuelan physical substitution".