- India Diversifies Oil Imports as U.S. Sanctions Reshape Global Trade
U.S. crude oil exports to India surged to their highest levels in over two years in February, reaching approximately 357,000 barrels per day (bpd), according to ship tracking data from Kpler. The sharp increase comes as India, the world’s third-largest oil importer and consumer, seeks alternative energy sources following the tightening of U.S. sanctions on Russian crude producers and tankers.
The latest figures mark a substantial jump from the 221,000 bpd exported to India in February 2024, highlighting a shift in global oil flows due to the evolving geopolitical landscape. The increase in U.S. crude shipments underscores the impact of Washington’s successive rounds of sanctions since October, which have disrupted trade with key oil importers such as India and China.
For years, India has been among the largest buyers of discounted Russian crude, leveraging the low prices that followed Western sanctions imposed on Moscow after its invasion of Ukraine in 2022. However, the latest U.S. restrictions targeting Russian vessels and energy transactions have complicated India’s ability to secure Russian supplies, forcing refiners to look for alternative sources.
“Indian refiners are trying to diversify their crude supplies, especially light-sweet barrels,” said Rohit Rathod, a senior analyst at Vortexa, a leading ship tracking firm. “Sanctions on Russian vessels that came in recently only pushed Indian buyers to look elsewhere.”
Light sweet crude, such as the West Texas Intermediate-Midland (WTI-Midland) variety, has been in high demand due to its lower sulfur content and ease of refining. According to Kpler’s data, about 80% of the crude exported from the U.S. to India in February was WTI-Midland.
India has been steadily increasing its energy trade with the U.S. In February, the Indian government stated that its total energy purchases from the U.S. could rise to $25 billion in the near future, up from $15 billion last year. This increase reflects India’s broader strategy to diversify its energy sources and reduce dependency on any single country.
Among the major buyers of U.S. crude in India were state-run Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and private-sector refining giant Reliance Industries. On the U.S. side, key exporters included oil producer Occidental Petroleum, global energy majors Equinor and Exxon Mobil, and trading house Gunvor.
Despite the shift, neither the Indian buyers nor the U.S. sellers immediately responded to requests for comments on the surge in trade.
The ripple effects of U.S. sanctions on Russian oil are being felt not just in India but across Asia. As Washington continues to tighten its grip on Russian energy exports, other major importers are also adjusting their buying patterns.
While India has turned to U.S. crude, China’s imports of American oil have declined significantly. In February, U.S. crude exports to China fell to just 76,000 bpd—one of the lowest levels in five years. The drop is attributed to Beijing’s imposition of a 10% tariff on U.S. oil, which has made American crude less competitive in the Chinese market.
At the same time, South Korea has emerged as a significant buyer of U.S. crude. In February, U.S. oil exports to South Korea hit a record 656,000 bpd, making it one of the largest destinations for American crude. The surge in shipments to South Korea suggests that some of the barrels originally bound for China have been redirected elsewhere.
The ongoing shifts in global oil trade underscore the complex interplay between geopolitics and energy markets. Washington’s efforts to curb Russia’s ability to finance its war in Ukraine have forced major oil consumers like India to seek new suppliers, leading to increased reliance on U.S. crude.
For India, the shift away from Russian oil is significant. Over the past two years, Russian crude accounted for as much as 40% of India’s total imports, largely due to heavy discounts offered by Moscow. However, with the recent U.S. sanctions restricting access to Russian shipments, India’s refiners are now left with fewer options.
The increase in U.S. crude exports to India also reflects New Delhi’s strategy of balancing its energy portfolio. By sourcing oil from multiple suppliers—including the U.S., the Middle East, and Africa—India aims to protect itself from supply disruptions and price volatility.
While U.S. oil exports to India have surged in the short term, challenges remain. Logistical costs, shipping constraints, and pricing competitiveness will determine whether this trend continues.
The longer shipping distance between the U.S. and India, compared to Russia or the Middle East, means higher freight costs, which could make U.S. crude less attractive if Russian barrels become available again at discounted rates. Additionally, U.S. crude competes with Middle Eastern oil, which is geographically closer and often priced more competitively.
However, as long as U.S. sanctions remain in place and Russian oil faces restrictions, Indian refiners may continue to increase their purchases of U.S. crude. If the expected growth in India-U.S. energy trade to $25 billion materializes, it would signal a deepening of bilateral energy ties between the two countries.
The sharp rise in U.S. crude oil exports to India marks a significant realignment in global energy markets, driven by Washington’s sanctions on Russia. As India seeks to diversify its oil imports, U.S. crude—particularly light-sweet WTI-Midland—has emerged as a key alternative.
With China reducing its intake of American crude and South Korea increasing its purchases, global oil trade routes are undergoing a transformation. Whether this shift is temporary or part of a longer-term trend will depend on how geopolitical and economic factors evolve in the coming months.
For now, the surge in U.S. oil shipments to India underscores how sanctions, trade policies, and energy security concerns continue to reshape the global oil landscape.
