India, which imports nearly 90% of its oil, has been diversifying its sources of oil suppliers away from the Middle East and Russia, and could purchase more oil and natural gas from the U.S. as a way to correct its trade imbalance, potentially strengthening the position of key U.S. benchmarks, like NYMEX WTI and Henry Hub natural gas. Specifically, the expansion of India’s refining capacity is driving higher crude oil flows from the U.S. Gulf Coast, potentially raising the need to buy further cargoes of U.S. crude oil.
The Indo-U.S. trade relationship also extends to the natural gas market. The rising share of U.S. liquefied natural gas (LNG) exports reached a record of 27 million metric tons (mt), or 19% of India’s total LNG imports in 2024 compared to just 11% in 2022. This growth is fueled by the Indian government’s vision to expand the role of natural gas in the country’s energy mix. The strategic trade cooperation between the two countries is underpinned by commercial and geopolitical considerations as the South Asian nation actively seeks to enhance its energy security through competitively priced long-term agreements based on the Henry Hub market.
Supported by an expanding middle class, energy diversification plans and increasing vehicle ownership, India’s oil demand growth looks set to reach 6.7 million barrels per day (mbd) by 2030, up from 5.4 mbd in 2023. India’s natural gas demand is also expected to climb substantially, reaching 203 billion cubic meters (bcm) annually by 2030, up from 65 bcm in 2023 according to S&P Global Commodity Insights.