US Secretary of State Marco Rubio arrived in New Delhi on Tuesday, spearheading a push to expand American energy sales to India, the world’s third-largest oil consumer. The visit comes as Iran’s oil exports collapse under tightened sanctions and global supply chains buckle under geopolitical strain. Rubio’s agenda, laden with liquefied natural gas (LNG) deals and crude supply agreements, reflects Washington’s bid to redirect India’s energy dependence away from Tehran and towards American producers.
India, which imports roughly 85 per cent of its crude oil, has historically been a major buyer of Iranian oil, taking advantage of discounted prices and flexible payment terms. However, the Trump administration’s reimposition of sanctions and the November 2018 waivers expiring have cut Iranian shipments to near zero. The crisis escalated last week when Tehran warned of potential blockades in the Strait of Hormuz, through which a fifth of global oil passes. India’s energy security now hangs in the balance.
Rubio’s pitch is straightforward: American shale oil and LNG offer stability and reliability that Iran cannot provide. US crude exports to India have already surged 45 per cent year-on-year, and new terminal capacity on the Gulf Coast is set to come online by 2020. But the transition is not frictionless. Indian refineries are configured for heavier, sour Iranian grades; switching to lighter US shale requires costly retrofits. Moreover, freight costs from the US Gulf are significantly higher than from Iran, eroding margins.
Yet the calculus is shifting. Crude oil prices have spiked above $70 a barrel amid the Iran crisis, making US supplies relatively more attractive. The US administration has also signalled readiness to use Strategic Petroleum Reserve releases to stabilise prices, a move likely to reassure Indian buyers. In addition, the impending completion of the US-India strategic energy partnership, which includes joint ventures in petrochemicals and renewables, sweetens the deal.
Rubio’s meetings with Prime Minister Narendra Modi and Oil Minister Dharmendra Pradhan are expected to finalise a memorandum of understanding on LNG procurement, with India aiming to double its natural gas usage from 6.5 per cent of its energy mix to 15 per cent by 2030. The US has committed to supplying 10 million tonnes of LNG annually by 2022, a fraction of India’s projected import needs but enough to dent Iran’s influence.
Critics argue that the US is merely replacing one dependency with another, a classic resource nationalism move. Environmental groups also note that expanding fossil fuel infrastructure runs counter to India’s renewable pledges. But for a nation where 300 million people still lack reliable electricity, the immediate imperative is keeping the lights on.
Rubio’s trip also carries a diplomatic undercurrent: a reminder that India must choose sides as the US-India-China triangle tightens. With China increasing its own Iranian crude imports and building strategic partnerships across West Asia, New Delhi faces pressure to align with Washington. Modi’s government must balance energy security, diplomatic interests, and domestic economic pressures.
As Rubio departed for a brief stop in Sri Lanka, the deal-making leaves India at a crossroads. The physics of energy is unambiguous: molecules flow to where demand and price align. But the geopolitics is messier. Rubio’s visit may have sealed some contracts, but the deeper question remains whether India can pivot fast enough, and at what cost to its strategic autonomy.
