5 February 2026 (Navroze Bureau) : India is preparing to significantly increase its purchases of crude oil from the United States, signalling a strategic shift driven by a mix of economic pragmatism and diplomatic calculation. The move reflects a classic “carrot and stick” approach in India–U.S. relations, where energy cooperation is being used both as an incentive to deepen ties and as a tool to manage broader trade and geopolitical pressures.
Over the past few years, the United States has emerged as an important energy supplier to India, particularly after Washington lifted its crude oil export ban in 2015. Since then, U.S. shale oil has found a growing market in India, the world’s third-largest oil importer. Now, with global energy markets facing uncertainty and geopolitical risks, New Delhi appears ready to expand these imports further.
One key driver behind this strategy is energy security. India imports more than 80 per cent of its crude oil needs, making diversification of suppliers a long-standing policy objective. While West Asian countries remain India’s primary suppliers, recent geopolitical tensions, shipping disruptions, and price volatility have reinforced the need to reduce overdependence on any single region. U.S. oil, though often more expensive due to transportation costs, offers reliability and geopolitical stability.
Another important factor is trade diplomacy. India and the United States have been engaged in negotiations to address trade imbalances and tariff-related concerns. Increasing oil imports from the U.S. helps narrow the bilateral trade deficit, a long-standing issue raised by Washington. By committing to higher energy purchases, India sends a strong signal of goodwill while strengthening its negotiating position on other trade matters.
Officials familiar with the discussions say the proposed increase in U.S. oil imports is being positioned as a “carrot” to reinforce strategic ties, even as India remains firm on protecting its domestic interests. Energy cooperation is seen as a relatively low-friction area where both sides can achieve tangible gains without major political backlash.
Indian refiners have already begun evaluating long-term supply contracts with U.S. producers, in addition to spot purchases. Such arrangements could provide price stability and predictable supply, benefiting both Indian oil companies and American exporters. The flexibility of U.S. crude grades, which can be blended to suit Indian refineries, adds to its appeal.
At the same time, the move also carries an element of the “stick.” By signalling readiness to pivot energy sourcing, India underscores its strategic autonomy and bargaining power. The message is clear: while India values long-standing partnerships with traditional suppliers, it will recalibrate its import mix in response to changing geopolitical and economic realities.
Global energy dynamics further strengthen the case for closer India–U.S. cooperation. As the U.S. continues to be one of the world’s top oil producers, it is eager to secure stable, large-scale buyers. India, with its rapidly growing energy demand, fits that profile perfectly. This alignment of interests has created momentum for deeper engagement.
However, challenges remain. U.S. crude is generally lighter than the heavy crude grades preferred by many Indian refineries, which are designed to process a diverse mix. Additionally, higher freight costs and price sensitivity in the Indian market could limit how much U.S. oil can realistically replace supplies from closer regions.
Despite these constraints, policy makers believe that even a moderate increase in U.S. oil imports can have outsized diplomatic and strategic benefits. Energy ties are increasingly viewed as a pillar of the broader India–U.S. strategic partnership, alongside defence, technology, and critical minerals cooperation.
The move also fits into India’s broader approach of balancing relationships among major global powers. By strengthening energy ties with the U.S., India adds another layer to its multi-aligned foreign policy, while maintaining engagements with West Asia, Russia, and other suppliers based on national interest.
Industry experts note that the timing is significant. With global oil markets expected to remain volatile, long-term energy planning has become a priority. Locking in diversified supply sources now could shield India from future shocks and enhance resilience.
For the United States, increased oil exports to India reinforce its role as a key energy partner in the Indo-Pacific. It also aligns with Washington’s broader strategy of strengthening economic ties with India as a counterbalance to global supply chain vulnerabilities.
As discussions progress, the final scale of increased imports will depend on commercial negotiations, price competitiveness, and refinery compatibility. Still, the direction is clear: energy is becoming a central instrument in India–U.S. diplomacy.
In a world where geopolitics and economics are increasingly intertwined, India’s readiness to hike U.S. oil purchases reflects a calculated blend of strategic foresight and diplomatic pragmatism—using energy as both a carrot to build partnerships and a stick to safeguard national interests.
Summary:
India plans to boost U.S. oil imports to enhance energy security and strengthen trade ties with Washington, using energy cooperation as a strategic tool amid shifting global and geopolitical dynamics.