Distant Brazil’s share of India’s oil import has vastly expanded this year
By Nantoo Banerjee
President Trump’s trade and tariff tantrums seem to be strongly working on India. The country’s crude oil imports from the United States surged by 51 percent during the first half of the current year ignoring the very high cost of import, including shipping, and travel time from the US ports. The political undercurrents, involving India’s ongoing trade negotiations with the US, are believed to be significantly responsible for the strategic shift despite a high time and cost burden. India, the world’s third largest consumer of petroleum, is the second largest importer of crude oil. The country is almost 90 percent import dependent on petroleum oil. The import focus has lately shifted substantially from traditional suppliers in West Asia to Russia and the US for price and diplomatic reasons.
Thanks to the low price of crude oil from the Western sanctions-hit Russia, the latter has emerged as the single largest oil supplier to India since the middle of last year. China is also a major importer of Russian oil. Since the middle of last year, India has been playing hide-and-seek with China to become the largest buyer of Russian oil. Presently, India is using a new much-shorter sea route – the Eastern Maritime Corridor – significantly boosting commodity trade between the two countries, especially crude oil shipments. The Russian Urals crude oil price is $2.00 per barrel below the $60 per barrel limit imposed by Western nations amid weak Brent prices. The price of US Brent oil is around $69 per barrel. The new eastern route from Vladivostok to Chennai is translating into savings on two counts: shipment times between the two countries and thereby transportation costs.
Earlier this year, India was under big trade pressure from the US to take steps towards making Washington “a leading supplier of oil and gas to India”, which could help the US bridge the trade deficit with India. US President Donald Trump asked India to step up oil imports from his country after his last meeting with Prime Minister Narendra Modi in Washington. Trump added that the US will “hopefully,” be India’s top oil and gas supplier. It sounded rather ominous or more like a warning as in 2024-25, India’s trade surplus with the US reached a record level of $41.18 billion, the largest from any country, from the $35.32 billion surplus it logged in the previous fiscal. India’s exports to the US grew by 11.6 percent to $86.51 billion. Its imports from the US increased by 7.44 percent to $45.33 billion.
The most shocking part is: India’s one-sided foreign trade with China is leading to increasingly large trade deficits with that country. Trump is believed to have been intrigued by the fact that while India is focussed to benefit more from the US trade, its trade deficit with China reached an all-time high at $99.2 billion in 2024-25 and, at the same time, India’s sheepish reaction to China’s growing import restrictions from India. The country’s exports to China contracted by 14.5 percent to only $14.25 billion, compared to $16.66 billion in the previous fiscal. Now, Trump is ready to enforce a new trade deal to balance the US-India trade.
This explains India’s sudden spike in crude oil imports from the US, this year. The country’s oil imports from the US jumped as much as over 270 percent year-on-year in the first four months of 2025, underscoring Delhi’s strategy of enhancing American imports amid prolonging trade pact negotiations. India is also importing more high-cost oil from distant Brazil purely for diplomatic reasons. The reason being advanced by India in support of its oil import decision to purchase substantially more from the US – also partly from Brazil – is that the country is diversifying its sources of crude oil in a volatile geopolitical and geo-economic environment. It may be noted that Brazil’s President Lula de Silva called Prime Minister Narendra Modi to convey condolences at the loss of lives in the terrorist attack in Pahalgam on April 22. At President Lula’s instance, the 17th BRICS summit in Rio de Janeiro condemned the Pahalgam terror attack among others and strongly supported India’s inclusion as a permanent member in the UN Security Council.
For heavily import-dependent India, oil has become a major tool of strategic and diplomatic relations for the country with oil exporting nations, including those traditional suppliers in nearby West Asia to Russia and the far-flung US, Canada and Brazil. Over the years, India has expanded its crude oil import sources to cover as many as 40 countries, including the recent addition of Argentina. Why not? The country’s total oil import bill, this year, is projected to top the $140-billion mark, provided that global oil prices remain within the $60-70 per barrel range. According to reports, India’s expenditure on crude oil imports was $137 billion in 2024-25. In addition, the country spent $15 billion on imported natural gas. Over 85 percent of India’s domestic crude oil demand is met through imports. Its share may go up to 90 percent this year, making it vulnerable to global price volatility. Tensions in key oil-producing regions such as West Asia and Russia can disrupt supply chains and drive-up prices. Currently, India’s main sources of crude oil imports are Russia, Iraq, Saudi Arabia, the United Arab Emirates, and the US.
For India, it makes sense to leverage its significant crude oil imports as a strategic tool in its foreign policy to maximum diplomatic and economic advantage. This is especially evident in its growing engagement with Russia, where discounted oil purchases have become a key factor in the bilateral relationship, particularly since the war in Ukraine. Last July, India surpassed China as the largest buyer of Russian oil. At the same time, the significant diversification of oil imports, especially involving the US, is meant to keep President Trump happy ahead of the bilateral trade agreement. Interestingly, China has drastically cut down its crude oil imports from the US, this year, to barely one percent of its total needs. Instead, in a strategic move, China has chosen to import more from Canada, a US rival. Clearly, China, the world’s second largest economy, has shown the courage and grit to take on the US and President Trump’s antics. Unfortunately, heavily import-dependent India seems to remain at the mercy of the US, at least for now. (IPA Service)
