Russia and the US compete for the Indian energy market

India is currently the third largest importer of crude oil globally, the fourth largest purchaser of liquefied natural gas (LNG) and the second largest importer of liquefied petroleum gas (LPG). Russia wants India to continue buying crude oil, despite the risk of the US increasing import taxes. Meanwhile, Washington also urged New Delhi to buy Venezuelan oil to replace Russian oil.

Above CNBCexperts say that replacing Russian oil in the context of limited supply from the Middle East will be “very difficult” for New Delhi, even though it is increasing its purchases of Venezuelan oil. “If you include the US and Venezuela, the Americas are increasingly important in India’s crude oil source structure,” said Sumit Ritolia – chief analyst at data firm Kpler.

Indian refiners cannot replace Russian or Middle Eastern oil with US crude, because US oil is “light”. India’s refineries are designed to process medium and heavy crude, Ritolia said. Venezuelan crude oil is “heavier” so this problem will be solved.

Compared to early March, the amount of Venezuelan crude oil that India imported increased from 0 to 383,000 barrels a day, Kpler said. Together with US oil, these two sources currently contribute 11% of India’s total crude oil imports in August.

On August 24, Russian President Vladimir Putin said “Russia is expanding exports to India and is ready to continue to do so.” Russia is currently India’s largest crude oil supplier, accounting for more than 50% of the country’s oil imports in June and July, as well as nearly 43% in August, according to Kpler.

In the April-July period, Russian exports to India increased by nearly 60% over the same period last year, according to India’s latest trade data. However, Moscow is not the only party increasing its market share in the Indian energy market.

The US has also become India’s largest supplier of LPG and LNG. LPG is mainly used for cooking in this country, while LNG has many industrial applications. In July, more than 70% of imported LPG and nearly 30% of India’s LNG supply came from the US, according to Kpler data.

US energy supply to India is “unlimited”, Sergio Gor – US Ambassador to India said at an event in New Delhi on August 22. He said Washington’s LPG and LNG supplies to India have increased by more than 60% compared to last year.

“The Middle East – especially Qatar, UAE and Saudi Arabia – previously dominated India’s LPG imports thanks to its logistics advantages,” said Pankaj Srivastava – Vice President of Commodity – Oil Markets at Rystad Energy. However, the war in the Middle East has broken this advantage.

Not only LNG and LPG, the US also wants to gain a larger proportion in India’s crude oil structure. Over the past 12 months, Washington has both threatened to impose tariffs and offered the prospect of an attractive trade agreement to force India to reduce imports of Russian oil.

In August 2025, Washington imposed a 25% tax on imports from India. But in February this year, they lifted this tax. US President Donald Trump said the US agreed to reduce tariffs with India to 18% after the country “agreed to stop buying Russian oil and significantly increase purchases from the US, as well as Venezuela”.

However, India has not confirmed this information. They only affirm that ensuring energy security is the only factor determining their purchasing activities.

High tariffs may return when the Russia sanctions bill is introduced to the US House of Representatives for approval in September. This bill proposes to impose taxes of up to 100% on countries that buy Russian energy.

In a meeting with Indian Foreign Minister S. Jaishankar earlier this week, President Putin mentioned the decline in trade between the two countries last year.

In August 2025, after the US import tax took effect, the amount of Russian oil that India bought gradually decreased. By February this year, this figure hit its lowest level in more than 3 years at 1.06 million barrels a day.

However, experts say that tax pressure from the US is unlikely to cause India to reduce purchases of Russian oil immediately, because global crude oil supply is currently very limited. “We do not expect that Russian oil imports will now decrease. Technically, replacing Russian oil is feasible, but economically and politically it is very complicated,” Ritolia concluded.