India’s Energy Crossroads: The Geopolitical Tug-of-War Between Washington and Moscow

By Priyanka Salve

India’s position as the world’s third-largest energy consumer has transformed it into a high-stakes arena for geopolitical maneuvering. As the South Asian nation works to meet its surging energy demands, it finds itself caught in the middle of a strategic tug-of-war between the United States and Russia, both of which are vying for a larger share of the Indian market.

From the complexities of the Iran war to the looming threat of U.S. tariffs, the forces reshaping India’s energy sourcing mix are as much political as they are economic.

A Shifting Import Landscape

India’s status as a critical energy importer is well-established: it currently ranks as the world’s third-largest importer of crude, the fourth-largest buyer of liquefied natural gas (LNG), and the second-largest importer of liquefied petroleum gas (LPG).

In recent months, the composition of these imports has shifted significantly. While Moscow remains eager to maintain its dominant position as India’s primary crude supplier—a role it solidified by accounting for over 50% of imports during June and July—Washington is aggressively pushing New Delhi to pivot toward the Americas. Specifically, the U.S. is encouraging India to increase its intake of Venezuelan crude to replace Russian barrels.

“If U.S. and Venezuelan crude are combined, the Americas are becoming more important to India’s crude basket,” said Sumit Ritolia, lead research analyst at market intelligence firm Kpler. However, analysts warn that this transition is far from simple. Indian refineries are often configured to process medium and heavy crude, making the “light” variety of U.S. oil an imperfect substitute for Russian supply. The influx of heavier Venezuelan crude, which rose from zero in March to 383,000 barrels per day in August, acts as a necessary bridge to resolve this technical hurdle.

The U.S. Strategy: Tariffs and Trade

The U.S. has successfully leveraged its output to become India’s top supplier of LPG and a major provider of LNG. U.S. Ambassador to India Sergio Gor recently lauded this partnership, noting that Washington’s energy supplies to India have grown by over 60% compared to last year.

However, Washington’s ambitions extend beyond market share. The U.S. government has utilized a combination of punitive tariff threats and the promise of lucrative bilateral trade deals to pressure New Delhi into curbing its reliance on Russian energy. The efficacy of this “stick” approach was demonstrated last year when the U.S. imposed 25% tariffs on Indian imports, prompting a 13% decline in India’s Russian oil intake during the fiscal year ending March 2026.

Although those tariffs were revoked in February following assurances regarding import diversification, the threat is far from dormant. A proposed Russia Sanctions bill currently pending in the U.S. House of Representatives could impose levies of up to 100% on nations that continue to source energy from Moscow.

The Reality of Supply Constraints

Despite the political pressure, experts suggest that a rapid shift away from Russian oil remains unlikely. With global supply chains currently tight, particularly due to the ongoing conflict in the Middle East, India faces a difficult dilemma.

“Replacing Russian barrels is technically feasible, but economically and politically fraught,” Ritolia explained. For New Delhi, the priority remains energy security. While the country is clearly deepening its ties with the U.S. in the energy sector, it continues to balance these moves against the necessity of maintaining affordable and consistent energy imports from Russia.

As the India-U.S.-Russia energy oil market continues to evolve, the global community is watching closely to see if India can successfully navigate these competing geopolitical interests without compromising its economic growth.

Quick Hits

• Foreign Inflows Surge: India has successfully attracted $73 billion in capital over the last 11 weeks, thanks to special deposit schemes designed to shore up the rupee.
• Tech Expansion: Porsche has inked a $1.46 billion, five-year AI deployment deal with India’s Tata Consultancy Services.
• Temasek’s Winning Streak: Singapore’s sovereign wealth fund, Temasek Holdings, is seeing significant returns in India, with three of its portfolio companies reporting gains of over 30% following recent IPOs.

Coming Up:

• Aug. 28: India industrial output data for July.
• Aug. 31: India GDP data for the April–June quarter.