U.S. seeks to expand energy sales to India. Why it could be a problem for New Delhi

US steps up efforts to sell oil and gas to India world’s third largest energy market It is grappling with supply disruptions in the Middle East and sees its alternatives narrowing after Washington removed exemptions for Iranian and Russian crude.

But experts said replacing oil and gas from Gulf countries and Russia with American energy was a difficult choice for India.

High freight costs, refinery infrastructure not fully compatible with US crude oil and longer delivery times are among the main obstacles to deepening energy trade with Washington.

On Wednesday, US Ambassador to India Sergio Gor met with Indian Petroleum and Natural Gas Minister Hardeep Singh Puri.energy security and unlocking new opportunities To accelerate growth.”

While Puri did not disclose details of the talks, Gor said in a post on X that the talks focused on “expanding access to reliable American energy to India” and “promoting long-term energy security and diversity for both countries.”

Gor is not the first US official to pressure India to buy more American energy. US President Donald Trump has raised the issue many times, even at times encouraging India to buy Venezuelan oil supplied through Washington.

According to Citi’s March 2 report, disruptions in the Strait of Hormuz threaten nearly 50 percent of India’s crude imports, 60 percent of its liquefied natural gas and almost all of its liquefied petroleum gas (LPG) supplies. Its impact is already being felt domestically.

Even last month, when US Treasury Secretary Scott Bessent made a statement 30-day waiver allowing India Refineries will continue to buy Russian oil, he said, adding that India is “an important partner of the United States” and that Washington expects New Delhi to increase its purchases of US crude oil.

On Thursday, Bessent said the U.S. would not Renewal of “general license” An exemption for Russian or Iranian oil only applied to sanctioned oil “found at sea before March 11.”

This has deepened New Delhi’s energy concerns and eliminated key sources of energy supply as global markets remain tight.

In February, New Delhi said as part of a broader US-India trade deal: “Intends” to import more More than $500 billion worth of U.S. energy, information and communications technology, coal and other products.

With India facing a serious energy supply shortage, Washington is now pressing for these intentions to translate into near-term commitments.

However, India is a net energy importer and fuel accounts for a large portion of the import bill. The continuous increase in energy prices may cause the current account deficit to widen and macroeconomic stability to deteriorate.

Since the beginning of the Iran war, the government Priority LPG supply for homes – where it represents the primary cooking fuel – by commercial use. This has led to the permanent closure of about 10% of restaurants and eateries, according to a report published Thursday by industry body PHD Chamber of Commerce and Industry.

Following reports that it may take 3-4 years for India to restore LPG supply to pre-war levels in Iran, the Ministry of Petroleum and Natural Gas shared details of the country’s LPG stock on Thursday.

of india Daily LPG demand remains The company stated that domestic supply is only around 50,000 tons, stating that X is about 80,000 tons in a post. The Ministry announced that it has procured 800,000 mt of “guaranteed import cargo” from the USA, Norway, Canada, Algeria and Russia to close the gap between domestic supply and weakening imports from the Gulf.

Experts said the US is keen on exporting LPG (a mixture of propane and butane) to India as it has accumulated excess stock. China was a major buyer of US propane, but in the absence of a trade agreement between Beijing and Washington, the US is looking for new markets.

This dynamic does not extend as easily to liquefied natural gas, where India is a highly price-sensitive buyer and could switch to coal for power generation and fertilizer production if gas prices rise, Sahdev said.

India is currently rationing its LNG supplies, according to a note shared by S&P Global Energy with CNBC, which said power generation, refining and petrochemicals are lower priority sectors and therefore more exposed to outages. Fertilizers, city gas for residential and commercial use, and transportation are among the higher priority sectors, it said.

Most of India’s crude oil imports still come from Russia, Saudi Arabia, Iraq, UAE and Kuwait. India’s options are narrowing as sanctions once again restrict access to Russian oil and disruptions in the Middle East tighten supply.

However, large-scale imports of US crude are unlikely, experts said, citing the mismatch between crude oil quality, refinery configurations and India’s demand requirements. India’s refineries are also designed to maximize diesel production, making U.S. crude less attractive.

Pankaj Srivastava, senior vice president of energy research firm Rystad Energy, said there is greater potential for the US to export LNG, LPG, ethane and propane to India.

“Damage to infrastructure in the Middle East, particularly in Qatar, could question the reliability of LNG and LPG supplies, and the United States could emerge as a natural partner,” he said.

But he also warned that imports would remain expensive due to conflicts in the Middle East and wider global supply shocks. Without meaningful reductions, he added, “the economy will not favor U.S. resources.”