US fuel exports are the almost definitely beneficiaries of a pledge by Donald Trump and Narendra Modi to make India a number one purchaser of American vitality, analysts stated, because the world’s fastest-growing massive nation sucks in additional fossil fuels from around the globe.
Modi and Trump, assembly final week for the primary time because the US president’s inauguration, agreed to extend American oil and fuel exports as a part of efforts to rebalance the 2 nations’ commerce relationship.
In the intervening time, Russia is the primary provider of crude to India, whereas Qatar is the largest supplier of liquefied pure fuel.
The US is the world’s largest LNG exporter, and already accounted for a few fifth of India’s provides in 2024. However the leaders’ dedication, which got here after Trump known as India a “tariff king” and “massive abuser” and threatened reciprocal tariffs, has the potential to broaden the marketplace for US suppliers, specialists say.
“Fuel would be the actual deal. India is among the final untapped markets for fuel globally which has scale,” stated Rajeev Lala, director of upstream options at S&P International.
At a time of extra benign costs for US fuel exports, “we’re able to take extra pure fuel”, stated Arvinder Singh Sahney, chair of the Indian Oil Company, considered one of India’s prime importers.
In a report launched final week, the Worldwide Power Company stated India’s pure fuel consumption would enhance by almost 60 per cent by 2030, with LNG imports set to greater than double in the identical interval pushed by regular demand progress and a a lot slower rise in home manufacturing.
In 2023, India’s complete internet fuel manufacturing met nearly half of its demand.
“There’s potential for India to purchase extra from all sources,” India’s oil and fuel minister Hardeep Singh Puri informed the Monetary Occasions in an interview shortly earlier than the leaders’ assembly. “In India there’s nice urge for food for extra vitality.”
The federal government’s “major coverage determination is to take the share of pure fuel in our vitality combine from 6 per cent to fifteen per cent by 2030”, for which India would want to import extra fuel, he stated.
Indian corporations have not too long ago signed fuel provide offers with nations as far-off as Argentina.
Puri stated India was already shopping for $20bn value of vitality from the US. By rising purchases, “it does appear to be vitality, oil and fuel, can be a spot the place India may make a dent in its commerce surplus with the US”, which stood at some $35bn final yr.
“US hydrocarbon purchases look to be the coin of the realm,” stated Kevin E book of analysis group ClearView Power Companions. “Trump . . . invited restitution for commerce surpluses with the US within the type of oil and fuel purchases.”
Since Vladimir Putin’s full-scale invasion of Ukraine in 2022, New Delhi has gorged on low-cost Russian oil, which has been topic to a G7 value cap. Final yr, Russia equipped India with one-third of its crude oil imports, or round 630mn barrels.
The US, against this, equipped India with one-tenth of that quantity, 65mn barrels, throughout that interval, in line with information from LSEG.
Harder sanctions handed by the Biden administration in January may hamper company India’s capacity to import Russian oil at cheaper costs, offering a chance for US imports.
“The low cost on Russian oil is now pretty small,” stated Shilan Shah, a senior economist at Capital Economics.
But the lengthy distance between the US and India, in contrast with shorter transport routes for Center Jap suppliers, and the technical problem for Indian refineries of switching between several types of crude, may restrict imports.
US oil and fuel exporters would welcome elevated Asian buying and selling alternatives, E book stated, noting the chance {that a} peace deal between Moscow and Kyiv may end in a lifting of sanctions on Russian exports.
This might finally end result within the resumption of low-cost Russian pipeline fuel into Europe, which may displace dearer US LNG provides despatched by ship.
The US LNG business stated it stood prepared to spice up exports to India, citing non-public operators’ aggressive progress plans for the development of recent terminals.
Enterprise International, one of many largest LNG suppliers within the US, stated it had capability to produce extra fuel to India and different Asian nations following the December start-up of its huge Plaquemines liquefaction plant in Louisiana.
“We’re nicely positioned and have the capability to ship on President Trump’s dedication to produce US allies with extra LNG . . . to fulfill rising world vitality demand,” stated chief govt Mike Sabel.
Further reporting by Leslie Hook in London
