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For India, the world’s third-largest crude importer, the tightening physical energy market presents a high-stakes balance between macroeconomic stability and strategic diplomacy.
War damage to Middle Eastern and Russian refining hubs has driven retail fuel prices higher. The limits of political intervention were evident when an agreement to source 3 million metric tons (15 million barrels) of Russian diesel failed to pull US retail diesel below $6 per gallon—a volume that covers only half of daily global diesel consumption. In this backdrop, last week marked a first. US Secretary of State Marco Rubio wrapped up a three-day visit to India on October 22, 2026, his second trip to the South Asian nation this year.
He arrived in Mumbai on October 20 from Uzbekistan. Unlike his May visit, which included New Delhi and a meeting with Prime Minister Narendra Modi, this itinerary deliberately skipped the capital. He described Mumbai as the “financial heart and soul of India,” underscoring the commercial and investment focus of the trip.
In Mumbai, Rubio held bilateral discussions with External Affairs Minister S. Jaishankar covering trade, investment, energy security, defence cooperation, critical and emerging technologies, and regional issues including the situation in West Asia. The two sides reaffirmed progress toward a bilateral trade agreement, which Rubio said was “very close” to completion with only a few issues remaining.
On October 21, Rubio travelled to Jamnagar in Gujarat to visit Reliance Industries’ refinery complex—the world’s largest single-site refinery run by billionaire businessman Mukesh Ambani. He was briefed on the company’s energy projects, including new energy giga-factories and data centres under construction. Discussions touched on deeper US-India energy cooperation and potential refining of Venezuelan crude.
No major new formal agreements were announced during the trip, but both sides described it as advancing the strategic and economic partnership. However, in statements during and after the visit, Rubio emphasised that the US and India are “perfectly aligned on core issues of national interest” and that closer economic partnership and energy security cooperation make both nations stronger. He noted that the US “doesn’t come enough” to India given its strategic importance.
Geographical ball room dance
The visit took place against the backdrop of ongoing differences over US tariffs, India’s purchases of Russian oil, and trade negotiations. Washington had recently waived certain potential tariffs linked to Russian energy purchases.
Washington imposed an additional 25% tariff on Indian goods in August 2025 to pressure New Delhi over its Russian oil purchases, arguing that Moscow’s energy revenues were helping finance its military in the Ukraine conflict. The penalty was withdrawn in February this year.
India secures alternative energy supplies—but at a rising cost.
India’s energy security is becoming a test of procurement flexibility and financial endurance. Russian crude deliveries have fallen from their mid-year highs. Russian crude made up more than half of India’s oil purchases in July, although the share fell to 33.5% in September, Reuters said. LNG supplies from the Middle East remain disrupted and European buyers are competing for replacement cargoes.
New Delhi has kept supplies flowing, but the adjustment is exposing an increasingly important distinction: securing energy is not the same as securing affordable energy. “What America is trying to do is gain greater control over the international oil market,” Jindal School of International Affairs adjunct professor and former Jawaharlal Nehru University professor, Anuradha Mitra Chenoy, told RT.
Alternative suppliers have helped sustain imports, while domestic interventions have protected priority consumers. The costs are being distributed across industrial users, importers and the public balance sheet.
Russian oil purchases retreat, but ties endure
India imported approximately 1.82mn barrels a day of Russian crude in September, down about 29 per cent from 2.57mn b/d in July. Chinese competition for available barrels and tighter sanctions-related constraints have complicated procurement, reducing the commercial advantages that helped make Russia a dominant supplier to Indian refiners.
The decline, however, should not be mistaken for a wholesale strategic withdrawal. India remained Russia’s largest crude buyer in September, ahead of China, which imported about 1.49mn b/d. October arrivals were expected to remain around 1.8mn–1.9mn b/d, broadly unchanged from September.
Beyond crude oil, the Middle Eastern conflict has severely disrupted South Asia’s natural gas supply. India’s natural gas demand dropped by 1.5 million tons as choked traffic through Hormuz sent spot prices surging, according to a report by energy consultancy Wood Mackenzie Power & Renewables.
Gas supplies expose a deeper vulnerability. The pressure on natural gas has been more acute.
Disruption to shipping through the Strait of Hormuz has weakened South Asia’s LNG outlook, forcing importers to seek replacement supplies in an expensive and competitive spot market.
Before the conflict, research and consultancy group Wood Mackenzie expected regional LNG demand to grow by 2.7mn tonnes, or 7 percent, in 2026. It now forecasts a contraction of about 6mn tonnes. The consultancy estimates conflict-related demand reductions of approximately 3mn tonnes in Bangladesh and 1.5mn tonnes each in India and Pakistan.
India has weathered the disruption better than its neighbors, but its response has also involved difficult choices about who receives gas.
According to Wood Mackenzie, India protected city-gas distribution while curtailing deliveries to fertilizer plants, refineries and industrial users in March and April. Supply continuity for priority consumers was therefore achieved partly by shifting the adjustment burden elsewhere in the economy.
The scale of India’s sourcing adjustment is visible in tanker-tracking data. Oman and Nigeria reshaped India’s import basket.
Additionally, New Delhi’s Venezuelan imports surged from $255 million in all of FY2026 ended March, to $3.6 billion in the April-August period this year, data shared by the Global Trade Research Initiative (GTRI) think tank showed.
India LNG Imports by Country: September 2026
| Country | September Volume (Tonnes) | MoM / YoY Change | Share of Monthly Imports (%) | Key Operational Factor |
| Oman | ~585,000 | +11.6% (MoM) | ~27.0% | Terminals sit outside the Strait of Hormuz, providing direct Arabian Sea access. |
| Nigeria | Ranked 2nd | — | — | Served as a key non-Gulf alternative for spot and short-term cargoes. |
| United States | ~340,000 | -60.7% (MoM) | — | Volumes diverted to Europe due to higher pre-winter premium prices. |
| UAE | Ranked 4th | — | — | Shipments constrained by Strait of Hormuz transit security risks. |
| Qatar | Unranked (Severely Reduced) | -90.0% (YoY) | — | Infrastructure damage at Ras Laffan and transit restrictions choked exports. |
Cumulative India LNG Imports: May–September 2026
Total 5-Month Imports: 11.87 million tonnes (+17.8% YoY)
| Supplier Country | Cumulative Volume (Million Tonnes) | Share of Total Imports (%) | Structural Position |
| United States | 3.41 | 28.7% | Largest overall supplier across the 5-month summer period. |
| Oman | 2.33 | 19.6% | Second-largest overall supplier; primary beneficiary of route diversification. |
| Nigeria | 2.20 | 18.5% | Third-largest supplier, providing crucial non-Strait volume buffer. |
| Qatar | 0.41 | 3.4% | Down from historical anchor status due to war-related operational outages. |
| Others / Rest of World | 5.52 | 29.8% | Aggregated spot and term cargoes from remaining global sources. |
Source: Tanker data, Wood Mackenzie & others
These figures demonstrate the flexibility of oil imports and show how extensively India has had to rebuild its supply mix.
Strong imports does not mean the shock has disappeared.
Rising LNG imports and weaker gas demand are not necessarily contradictory. Import figures measure actual purchases over a specified period; Wood Mackenzie’s estimate concerns demand lost to the conflict. The two should not be read as directly comparable indicators.
Declining domestic gas production and growing city-gas consumption have supported India’s import requirements, according to Kpler. Imports can therefore remain strong even while higher prices and supply constraints suppress consumption among more price-sensitive industrial users.
The distinction matters. A country can maintain cargo arrivals and still experience an economic loss through curtailed production, higher input costs or forgone consumption.
Diversification reduces route risk—not price risk.
Replacement supplies have come at a considerable cost. Wood Mackenzie reports that Indian tender award prices reached $26.4 per million British thermal units in September, compared with roughly $16.8–$18.8 between March and June. Tendering demand nevertheless remained robust, reflecting buyers’ continuing need to secure gas.
Competition from Europe has added pressure. European buyers increased purchases ahead of winter, helping draw US cargoes away from India; more than half of US LNG exports went to Europe in September, according to LSEG data cited in reporting on India’s changing import mix.
Diversification has consequently reduced exposure to one shipping bottleneck without eliminating exposure to global scarcity. Cargoes originating outside Hormuz may offer greater route security, but they do not necessarily offer greater price certainty.
Slowly, the cost is reaching the public balance sheet.
India’s response has also depended on government support. Wood Mackenzie says subsidies helped sustain fertilizer production, with urea output reaching record levels in May and June despite the disruption.
That provides a counterweight to the narrative of successful procurement. Alternative cargoes can keep essential industries operating, but if their higher costs cannot be passed through, the financial burden must be absorbed elsewhere.
Wood Mackenzie’s broader warning is that emergency interventions across South Asia are postponing costs rather than eliminating them. India’s greater purchasing power and more diversified supplier base offer protection, but do not make the adjustment costless.
For New Delhi, the challenge is therefore broader than replacing Russian barrels or Qatari gas. It is to preserve supply security without allowing the cost of that security to erode industrial competitiveness, strain government finances or undermine consumption.
India has demonstrated that it can find alternative energy supplies. The harder question is how long it can continue paying the premium.
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