A man pushes a tricycle loaded with LPG cylinders on the road below an Adani sign in Mumbai. The US-based Hindenburg Research firm’s alleged fraud by Adani Enterprises has sparked a political debate by opposition parties in India.
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India is increasing its energy imports from the United States to reduce its trade surplus with Washington, a key demand of the Trump administration in trade talks with New Delhi.
On Monday, Indian Union Petroleum and Natural Gas Minister Hardeep Singh Puri announced an agreement in which the United States will supply nearly 10% of New Delhi’s liquefied petroleum gas (LPG) imports.
In a post on X, he said India’s National Oil Company had signed a one-year contract to import about 2.2 million tonnes of LPG annually from the US Gulf Coast, calling it a “historic first”.
This will be the “first structured contract for US-made LPG for the Indian market,” he said, and the purchase will be based on “Mount Bellevue as the benchmark for LPG purchases.”
“We believe this move is aimed at diversifying LPG procurement, which is currently concentrated in the Middle East, and reducing the trade surplus with the United States,” Vineet Banka, an energy equity analyst at Nomura, told CNBC in an email.
India’s total LPG imports are about 20 million to 21 million tonnes a year, and if 10% of that supply came from the US at current prices, it would increase imports from the US by $1 billion, but Banka said the increase would be “minor” compared to India’s $40 billion trade surplus with the US.
Relations between the US and India have been strained since August after the US government imposed 50% tariffs on Indian goods. A 25% reciprocal tariff was imposed on Indian goods as part of a broader strategy to address trade imbalances and boost domestic industry, with the remaining 25% coming from India’s imports of Russian crude oil.
US-India energy trade deepens
In September, President Donald Trump ramped up his criticism of India, calling the country’s trade relationship “a completely one-sided disaster!”
In the same month, Indian Commerce Minister Piyush Goyal, who was in the US for trade negotiations, reportedly said that India would expand trade in energy products with the US in the coming years.
“And as a close friend and natural partner, our energy security goals will very much include the involvement of the United States,” the Indian minister said.
Since then, the two countries have softened their stance, and President Trump recently evoked memories of his previous visit to India when addressing reporters at the White House on November 6, calling Prime Minister Narendra Modi a “friend” and a “great man.”
The US president also said that India has “almost stopped purchasing Russian crude oil,” but this fact is not yet supported by data.
India’s imports of Russian crude oil remain relatively high at 1.85 million barrels per day, compared to 1.6 million barrels in October, according to data shared by tanker tracker Kpler as of November 17.
“Given that buyers have been given permission to wind down deals with Rosneft and Lukoil until November 21, we expect Indian refiners to rush to bring in as many barrels as possible in the coming days,” said Kpler’s Muyu Xu.
But he added that India’s imports of US crude oil “increased sharply in October, reaching 568 kbd (thousand barrels per day), the highest level since February 2021.”
According to Nomura data, India imports about 5 million barrels of crude oil per day.According to that data, assuming that this year’s blend of Russian crude oil is reduced from 35% to 15%, and taking into account the average discount of $3 per barrel for Russian crude oil, the total impact on import bills is projected to be about $1.1 billion.
Impact on Indian economy
Experts are divided on how this change in the energy mix will affect India’s economy.
“India could also benefit if this shift (from Russian oil imports) leads to a trade deal with the US and lower tariffs,” according to Nomura’s Asia economics team. The company assumes that the 25% fine on Russia will be “lifted after November, but the 25% reciprocal tariff will continue until FY2026.”
However, Pankaj Srivastava of Rystad Energy warns that India’s import bill is expected to rise.
“With the end of the U.S.-India relationship, lower tariffs, and plans to expand refineries in 2026/27 along with petrochemical plants, import bills are expected to rise unless India significantly increases domestic production,” Srivastava, Rystad’s senior vice president of commodity markets, told CNBC.
