On August 4, U.S. President Trump posted on social media that, because India has been purchasing large quantities of Russian oil and profiting from it, the United States will significantly increase import tariffs on Indian products. Indian officials responded firmly, stating that India’s energy procurement is guided solely by national interests and will not be influenced by external pressures. India will take all necessary measures to safeguard its national interests and economic security. Faced with the threat of U.S. tariffs, why has India chosen to take a tough stance?

This issue stems from India’s oil structure. India has relatively limited proven oil reserves domestically. According to data from the U.S. Energy Information Administration, India’s proven oil reserves amount to approximately 5.9 billion barrels, accounting for only 0.3% of the world’s total proven oil reserves. In 2024, India’s domestic crude oil production stood at 29.4 million tons, a decrease of 18% compared to 2017 and marking a seventh consecutive year of decline.

Corresponding to the limited production is robust demand for petroleum. According to data released by the Indian government, India’s demand for petroleum products reached 240 million tons in 2024, representing a year-on-year increase of 3.9% and hitting a new all-time high. Among these, aviation fuel consumption grew at the fastest pace, rising by 9.2% year-on-year; gasoline consumption increased by 8.1%, with gasoline-powered vehicles accounting for 80% of automobile sales in the Indian market. Diesel consumption rose by only 2.7%, yet diesel still accounted for 38% of total petroleum product demand, underscoring its central role in India’s petroleum market. Demand for petroleum products is expected to grow further by 3.2% in 2025, ensuring that India remains firmly entrenched as the world’s third-largest consumer of crude oil.

India’s population currently exceeds 1.4 billion, accounting for approximately 17.8% of the global population. According to United Nations projections, India’s population will reach 1.7 billion by 2050. Data from the World Bank show that India’s urbanization rate has gradually risen from 31% in 2011 to 37% in 2024. As urban populations grow, their energy demands—in areas such as transportation, housing, and commerce—are steadily increasing. Consequently, energy consumption by households and industries, particularly in the electricity and transportation sectors, is set to rise significantly.

Recently, several international institutions have raised their forecasts for India’s oil market, predicting that India will become one of the key engines driving global oil demand growth. The International Energy Agency forecasts that India will be a major source of growth in global oil demand, with India’s oil demand expected to increase by nearly 2 million barrels per day by 2035. S&P Global projects that India’s oil consumption will grow at an annual rate of 4% to 5% over the next 10 years. Moody’s predicts that India’s oil demand will rise by 3.39% in 2025, reaching 5.74 million barrels per day, and will further increase by 4.28% in 2026, reaching 5.99 million barrels per day.

This has also made it difficult to change India’s highly dependent energy situation in the short term. Data shows that in 2024, India’s import dependency reached as high as 89%, with annual oil import expenditures totaling 132.4 billion U.S. dollars. Among these imports, Russia is the largest supplier; the share of oil imported from Russia has surged from 0.2% before the outbreak of the Russia-Ukraine conflict in 2022 to between 35% and 40% today, amounting to an average daily import of about 1.9 million barrels—a figure accounting for nearly 50% of Russia’s seaborne crude oil exports. However, relatively lower import prices have helped reduce India’s crude oil import expenditures by 16%.

However, as the U.S. and Western countries intensify sanctions on Russian oil, the Indian government has adopted an active energy diplomacy policy. By forging cooperative relationships with energy-rich countries in regions such as the Middle East, Africa, and Central Asia, India is diversifying its import sources and ensuring the stability of its energy supply. In addition to importing oil from Russia, in 2024, crude oil imports from the Middle East accounted for 46%. To mitigate the potential risks associated with the Strait of Hormuz—a vulnerability in India’s energy security—India has increased its crude oil imports from oil-producing countries in the Americas, including the United States, Canada, and Colombia, as well as from West African producers such as Nigeria and Angola. Particularly under pressure from trade negotiations, India’s crude oil imports from the U.S. surged to 6.31 million tons in the first four months of 2025, valued at $3.78 billion, accounting for 7% of India’s total crude oil imports. In the first quarter of 2025, India’s crude oil imports from the U.S. rose by 66.7% year-on-year, while imports from American countries such as Canada and Colombia also saw significant growth. Meanwhile, crude oil imports from West Africa and Central Asia continued to grow steadily.

Faced with recent U.S. threats to impose punitive tariffs on India’s imports of Russian oil, India’s Minister of Petroleum and Natural Gas, Hardeep Singh Puri, stated that India will meet its demand by diversifying its import sources. Currently, the number of countries from which India imports crude oil has increased from 27 to 40. India’s strategic petroleum reserves can cover 74 days of consumption, and Indian refineries are capable of processing various types of crude oil. Indian officials have also instructed domestic refining companies—particularly state-owned oil giants such as Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum—to develop contingency plans for replacing Russian oil and to design emergency policy measures centered around “stopping imports of Russian oil.” However, market analysts believe that it will take more than just a short-term effort for India to completely wean itself off Russian oil imports. Data shows that in the first half of 2025, India’s average daily imports of Russian oil reached 1.75 million barrels, an increase of 1% compared to the same period last year.

It is worth noting that the Indian government has also accelerated the pace of exploration and development of domestic oil and gas resources. According to S&P Global data, promising areas such as the Andaman Sea, the Mahanadi Basin, and the Kerala-Konkan Basin remain largely unexplored on a large scale. Currently, only 23% of India’s sedimentary basins have undergone moderate or deep-level exploration. While promoting oil and gas companies to enhance the efficiency of exploiting mature, already-operating fields, the Indian government has further taken measures such as opening up land licensing, introducing policies for oil and gas exploration permits, and reforming profit-sharing mechanisms. These steps are aimed at attracting both domestic and foreign investment, encouraging more financially strong oil and gas companies to participate in project bidding and engage in exploration and development activities, thereby boosting the country’s self-sufficient oil and gas production.