India's Oil and Gas Imports from the US Drop 43 percent as West Asian Supplies Recover

India’s energy imports from the United States declined sharply in September as supplies from traditional West Asian producers recovered despite ongoing regional tensions. Industry executives expect countries such as the UAE, Iraq and Saudi Arabia to remain India’s primary energy suppliers once the conflict ends, highlighting the continued importance of the Gulf region to the country’s energy security. According to ship-tracking data accessed by Business Standard, India’s combined imports of crude oil, liquefied natural gas (LNG) and liquefied petroleum gas (LPG) from the US fell 43 per cent in September to 1.22 million tonnes, compared with 2.13 million tonnes in August. The decline brought American energy shipments to their lowest level since April.

Indian refiners had increased purchases from alternative suppliers after the conflict in West Asia began disrupting energy flows in March. However, the latest figures suggest that American supplies have struggled to maintain their earlier momentum. September imports were slightly below the level recorded a year earlier and more than 50 per cent lower than the two-year high of 2.86 million tonnes reached in October 2025.

In contrast, energy imports from West Asia rose 67 per cent month-on-month in September to 13.56 million tonnes. Preliminary October shipments had approached six million tonnes, with maritime intelligence firm Kpler projecting that the month's total could exceed September's purchases. The recovery in Gulf supplies indicates that India's established energy trade relationships continue to play a major role in meeting domestic demand, even as the country explores alternative sources to reduce its exposure to regional disruptions.

Oil exports from the Gulf recovered to approximately 16.5 million barrels per day in September, approaching pre-conflict levels. Nevertheless, shipping conditions remained different from those before the war. Around 60 per cent of Gulf oil exports passed through the Strait of Hormuz, compared with 83 per cent before the conflict.

The UAE and Iraq have adapted by using pipelines, alternative export terminals and ship-to-ship transfers to keep supplies moving. A report by OilPrice, citing a Standard Chartered note, said these measures had helped maintain exports despite security challenges. The improved ability of Gulf producers to redirect shipments has also reduced Iran's capacity to disrupt oil exports across the region.

Senior executives at state-owned Indian refiners said the government had not instructed companies to purchase crude oil, LNG or LPG from any particular country. Although Washington has encouraged New Delhi to increase energy imports from the US, refiners continue to base their decisions on commercial factors such as price, availability, transportation costs and crude quality.

Higher shipping expenses have become a major obstacle to increasing American oil purchases. Indian refineries are particularly suited to processing certain medium-sour crude grades, but supplies of these varieties from the US are limited. American light-sweet crude can also become less competitive when its delivered cost is compared with alternative supplies, including Russian oil.

Kpler data indicated that India's crude oil imports from the US had fallen to around 91,000 barrels per day in October, approximately 30 per cent below the September average. The decline reflects the growing influence of transportation costs and the improving availability of supplies from West Asia. Shipping rates have risen dramatically amid regional insecurity. A shipbroker based in Abu Dhabi told Business Standard that daily charter rates for very large crude carriers, which can transport approximately two million barrels, had climbed to nearly $1.5 million. Before the conflict, rates were around $50,000 to $75,000 per day in early 2026.

Refining officials estimated that transportation and insurance now account for 20–25 per cent of a crude shipment's value, compared with less than five per cent before the conflict. Some vessels travelling from the US have also faced journeys exceeding 45 days as ships reroute around the Cape of Good Hope to avoid security risks near the Suez Canal and Red Sea. These additional expenses have made alternative supplies more attractive for Indian refiners, particularly as Gulf producers restore exports and offer shorter delivery routes to Indian ports.

The decline in US energy imports also comes amid continuing negotiations between India and the US over a bilateral trade agreement. Increased purchases of American energy have been part of Washington's broader trade agenda under President Donald Trump, who has encouraged major economies to buy more US oil and gas. 

US Trade Representative Jamieson Greer has indicated that an agreement is not imminent because several issues remain unresolved. While European countries have increased purchases of American LNG and diesel, and China has pursued longer-term LNG arrangements, Indian state-owned oil companies have made limited progress in securing major new crude oil or LNG import deals with US suppliers. A senior refining official described existing purchases as largely opportunistic.

Finance Minister Nirmala Sitharaman has also indicated that discussions between New Delhi and Washington are continuing, although reaching an agreement may require both sides to resolve difficult outstanding issues. Potential US sanctions targeting purchases of Russian and Iranian energy add another layer of uncertainty. The supplied report refers to legislation identified as the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, which it says gives the US president authority to impose tariffs of up to 100 per cent on countries continuing to purchase Russian or Iranian oil and gas. The practical implications for India would depend on the legislation's precise provisions and how any measures are implemented.

India's imports of American fossil fuels, excluding coal, had exceeded two million tonnes on three occasions within a six-month period. Supplies reached 2.58 million tonnes in May, the second-highest level in five years after the 2.86 million tonnes recorded in October 2025. The subsequent slowdown highlights how quickly energy trade patterns can change when shipping costs, supply availability and geopolitical risks shift.

For Indian refiners, purchasing decisions involve more than the quoted price of crude oil. The quality of each grade, its suitability for refinery equipment, insurance premiums, delivery times and the reliability of shipping routes all influence the final cost. Consequently, even when American supplies are available, Gulf crude may offer a more economical option.

The latest figures reinforce the importance of West Asia to India's energy security. The UAE, Iraq and Saudi Arabia benefit from established supply networks, relatively shorter shipping distances and long-standing commercial relationships with Indian refiners. Although the US remains an important potential supplier, its exports cannot always replace Gulf energy on a commercially equivalent basis. India is likely to continue diversifying its energy sources while adjusting purchases according to market conditions. The recovery in West Asian imports suggests that traditional Gulf suppliers are regaining their position as major providers, despite the continuing uncertainty surrounding regional shipping routes.

India's energy purchasing strategy will depend on global prices, freight and insurance costs, the availability of suitable crude grades and the security of maritime trade. The latest import figures demonstrate that commercial considerations remain central to New Delhi's energy decisions, even as India and the US work to strengthen their broader economic relationship.

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