India sees renewed interest in US crude amid energy diplomacy, diversification drive

India's appetite for US crude showed signs of revival in early 2025 after a prolonged period of sluggish inflows -- a trend likely to continue as renewed energy diplomacy between New Delhi and Washington, coupled with fresh sanctions on Russia, takes center stage.

Indian Prime Minister Narendra Modi's visit to the US in mid-February and the pledge by the two world leaders to boost energy ties would mean increased US crude flows to India -- both on a spot and term contract basis, analysts and industry sources told Platts, part of S&P Global Commodity Insights.

"While Russian crude flows remained steady amid the new sanctions, we have observed renewed interest among Indian refiners for US-origin crude," said Benjamin Tang, head of liquid bulk at S&P Global Commodities at Sea, adding that MRPL had a cargo of WTI Midland in transit onboard the VLCC Khurais for arrival in mid-March -- the refiner's first US crude delivery scheduled since 2021.

India imported 232,342 b/d of US crude in January and 76,467 b/d in February, compared with an average of 151,872 b/d in 2024, data from CAS showed.

"Indian refiners have been used to relatively large volumes of US crude in the past but then slowed down over the past two to three years. And now, with a bit of a turbulent period, refiners want to keep other options open," said an Indian industry source.

Abhishek Ranjan, South Asia oil research lead at Commodity Insights, said with Donald Trump back in the US presidency, 2025 would be a critical year for India's crude diversification strategy.

"The government is focused on balancing crude security with keeping oil costs manageable, especially with all the global changes on the horizon. As we anticipate crude runs to increase by about 100,000-150,000 b/d year-over-year in 2025, how effectively India negotiates its crude sourcing will significantly influence refinery intake as well as export margins," Ranjan said.

Impact of sanctions

The US and the UK announced fresh sanctions on Russia's energy sector Jan. 10, including curbs on two major Russian oil producers, doubling down on a recent push to hit Moscow's oil revenues being sustained by a shadow tanker fleet. The sanctions tightened curbs against Gazprom Neft and Surgutneftegas and added more than 180 ships, dozens of oil traders, oilfield service providers, tanker owners and managers, insurance companies, and energy officials to the blacklist.

Refiners and analysts said that, following the new sanctions on Russia, India has witnessed some slowdown in inflows from the non-OPEC supplier, but the impact has not been substantial.

"All shipments that were scheduled came in without any issues," said one refining source.

"The recent US sanctions on Russian entities have raised some concerns, but their impact on India seems limited since those entities accounted for less than 20% of imports last year," said Ranjan.

Russian imports accounted for about 35% of India's total crude requirements in 2024, data from CAS showed. India's imports of Russia-origin crude were 1.67 million b/d in January and 1.46 million b/d in February, compared with an average monthly import of 1.79 million b/d in 2024.

While India continued to buy relatively smaller volumes from regions like Latin America and Africa, the Middle East and Russia together accounted for nearly 80% of India's crude imports, according to Commodity Insights data.

"We buy crude oil, and we do not sell it. The onus of delivering crude through clear shipping channels lies with the seller of crude. We are very clear in our approach towards oil trade with Russia. We will accept only those Russian crude cargoes that adhere to all sanctions policies and are free from any issues," said a senior oil ministry official.

Indian refining officials expect the flow of Russian crude to normalize in H2.

Non-OPEC crudes

In January, India's overall crude imports from all origins rose to 20.8 million mt (4.9 million b/d) -- the highest since June 2024 and up 3.2% from December.

Oil ministry officials expect India's crude imports to rise for the sixth month after hitting a 10-month high in January despite curbs on Russian oil trade.

Analysts said month-on-month crude imports rose despite higher prices as Indian refiners built up stocks, considering the fresh round of sanctions on Russian oil. However, India's crude imports fell 3.1% year over year in January as prices were relatively higher than a year ago.

"Indian refiners are looking for opportunities to boost non-OPEC crudes in its basket. This year, we will see those volumes rising substantially.

In an interview with Platts, Indian Petroleum Minister Hardeep Singh Puri recently said that non-OPEC suppliers -- such as the US, Canada, Guyana, and Russia -- would increasingly have bigger footprints in India's crude oil basket in the foreseeable future.