India’s recently announced trade agreement with the United States marks a significant recalibration of bilateral economic ties, with energy emerging as a key pillar of the deal. Announced by US President Donald Trump and confirmed by Prime Minister Narendra Modi, the agreement lowers US tariffs on Indian goods from 50% to about 18%, easing pressure on Indian exporters while opening the door for changes in India’s crude oil sourcing strategy.
A notable element of the announcement was Trump’s claim that India would reduce its reliance on Russian crude and increase purchases from the United States, with Venezuela also mentioned as a potential supplier. However, the full text of the agreement has not yet been released, leaving questions around timelines, volumes, and enforcement mechanisms unanswered.
India currently imports over 85% of its crude oil needs, making it one of the world’s largest oil buyers. In December 2025 alone, crude imports touched 21.59 million tonnes, reflecting strong domestic demand and sustained dependence on overseas supplies. While Russia has accounted for nearly 30–40% of India’s crude imports in recent years, data suggests diversification was already underway even before the trade deal. The share of US crude in India’s oil imports rose to about 8.1% between April and November, up from 4–5% the previous year.
Market experts view the oil clause not as a dramatic pivot, but as a pragmatic trade-off. Analysts note that discounts on Russian oil have narrowed, reducing the cost advantage that once drove higher purchases. At the same time, potential new supply from Venezuela and increased US exports offer India more flexibility in managing its import basket.
However, US crude comes with higher shipping and processing costs compared to Russian barrels, meaning any rapid shift could increase India’s oil import bill and add inflationary pressure. As a result, refiners are expected to move cautiously, honoring existing contracts and adjusting procurement based on price competitiveness, logistics, and refinery compatibility.
Crucially, experts emphasize that the agreement does not compromise India’s strategic autonomy. The country is likely to pursue a calibrated approach that balances energy security, economic efficiency, and geopolitical interests, including its relationships within blocs such as BRICS.
For now, the deal signals intent rather than immediate transformation. The real impact on India’s crude oil basket will depend on the fine print of the agreement and how effectively both countries manage a phased and flexible transition in the months ahead.
