Despite the clamor surrounding net zero and the hostility of the Biden administration toward fossil fuels, oil produced in the U.S. is ensuring access to affordable crude for billions of people around the world.
Among the benefactors of U.S. hydrocarbon exports are 1.4 billion Indians. India’s oil imports from the U.S. have risen dramatically in the past decade, and this means availability of quality energy from a stable source for India’s rapidly growing economy.
India has been one of the world's largest oil importers for decades, and its demand for oil has been increasing over the years. According to the International Energy Agency (IEA), India's energy demand is expected to double by 2040, driven by population growth, urbanization and industrialization.
In February this year, India's demand for gasoline and diesel hit a 24-year high and is expected to only increase in the coming decades. By 2030, India’s oil demand is set to rise 50 percent from current levels, whereas the global demand is set to rise only by seven percent. The country’s current demand hovers around five million barrels per day (mbpd), and is estimated to more than double to 11 mbpd by the year 2045.
Until a few years ago, India's oil imports were largely supplied by countries in the Middle East. Saudi Arabia, Iraq, and Iran were among the top suppliers of crude oil to India. However, the country has been diversifying its sources in recent years, with the United States emerging as a significant supplier of oil.
India's oil imports from the U.S. have been rising steadily since 2018, and this trend is expected to continue. According to data from the U.S. Energy Information Administration (EIA), India's crude oil imports from the U.S. increased from 22,000 barrels per day (bpd) in 2017 to 251,000 bpd in 2020.
In fact, India was the largest export destination of U.S. crude oil exports in 2021. Even with an increase in purchases of Russian oil at a discounted rate in 2022, crude oil imports from the U.S. reached a record 14.3 percent of the total oil import share in December.
For India, the increased diversification of its oil imports is a positive development as it reduces the country's dependence on any single supplier, thus reducing the risk of supply disruption. Diversification of oil imports also helps India to secure better deals and prices for crude oil.
“Surprisingly, the India-U.S. oil trade is not a one-way street: India also exports an average of roughly $3 billion worth of diesel and refined petroleum products to the United States each year,” notes Hari Seshasayee.
According to Hari, even if India achieves its ambitious 2040 forecasts for increasing the share of renewables, “India would still need to import 7.2 million bpd of oil annually to meet its energy demands—a sizeable increase from the 4.3 million bpd of annual imports between 2016 and 2020.
If the share of renewables in India’s energy matrix is unable to increase 10-fold between by 2040, “India may need to import as much as 9.3 million bpd of oil each year. The import of petroleum thus remains an indispensable part of India’s near-future, whether we like it or not.” Thus, India’s imports of crude oil from US are set to continue for decades even if its imports from other countries increase.
And it’s not just oil that India imports from the U.S. The shale revolution in the U.S. has transformed the global energy landscape, making the U.S. one of the largest producers of oil and gas in the world. The U.S. gas boom under the Trump administration came at the right time for energy-hungry India.
As per the U.S. EIA, India has been the world’s fourth-largest importer of liquefied natural gas (LNG) since 2011. In 2021, 16 percent of all liquified natural gas imports into India came from the U.S., making it the second largest supplier of natural gas to India. In 2023, India expressed its interest in acquiring a major stake in a new gas export terminal in Louisiana.
So, despite the Biden administration’s restrictive energy policies, American oil and gas production has been helping the 1.4 billion people of India to have continued supplies of gasoline, diesel, and natural gas. For a nation that is still trying to alleviate poverty, the supply of clean fuel from a dependable source is crucial.
