Energy-hungry India offers opportunities for U.S. exports

AT A GLANCE:

• India’s rapidly increasing energy demands have significant global implications, potentially benefiting U.S. oil and natural gas markets and the growth of the NYMEX WTI and Henry Hub benchmarks.
• India’s expanding refining capacity is impacting global crude flows, notably increasing volumes from the U.S. Gulf Coast, further strengthening WTI crude oil’s position as an international benchmark.

India’s voracious appetite for oil and natural gas amid rapid economic growth in the world’s most populous nation presents opportunities for U.S. energy producers to increase their market share in the country.

India, which imports nearly 90% of its oil, has been diversifying its sources of oil suppliers away from the Middle East and Russia, and could purchase more oil and natural gas from the U.S. as a way to correct its trade imbalance, potentially strengthening the position of key U.S. benchmarks, like NYMEX WTI and Henry Hub natural gas. Specifically, the expansion of India’s refining capacity is driving higher crude oil flows from the U.S. Gulf Coast, potentially raising the need to buy further cargoes of U.S. crude oil.

The Indo-U.S. trade relationship also extends to the natural gas market. The rising share of U.S. liquefied natural gas (LNG) exports reached a record of 27 million metric tons (mt), or 19% of India’s total LNG imports in 2024 compared to just 11% in 2022. This growth is fueled by the Indian government’s vision to expand the role of natural gas in the country’s energy mix. The strategic trade cooperation between the two countries is underpinned by commercial and geopolitical considerations as the South Asian nation actively seeks to enhance its energy security through competitively priced long-term agreements based on the Henry Hub market.

Supported by an expanding middle class, energy diversification plans and increasing vehicle ownership, India’s oil demand growth looks set to reach 6.7 million barrels per day (mbd) by 2030, up from 5.4 mbd in 2023. India’s natural gas demand is also expected to climb substantially, reaching 203 billion cubic meters (bcm) annually by 2030, up from 65 bcm in 2023 according to S&P Global Commodity Insights.

The International Energy Agency (IEA) expects India to become the largest source of oil demand growth by 2030, surpassing China. Indian gross domestic product grew by 6.2% over the 2024-2025 period ending March this year, an increase from 5.6% the prior year. Morgan Stanley noted that the Indian economy will become the third largest economy by 2028.

In the oil markets, spread values between the key Middle East crudes and WTI has become an important measure of profitability of exports from the U.S. to Asia. WTI competes with Middle Eastern light sweet crudes like Murban for Asian refinery demand. Asian refiners also watch the price of heavier grades, like Oman, to determine the cost-effectiveness of running sweet versus sour, a reference to sulfur content. Like WTI is to the U.S., Oman is a leading benchmark in the Middle East with an active futures contract listed on the Gulf Mercantile Exchange, a leading sour crude price marker.

The chart below shows the profitability of WTI versus Platts Murban crude oil from the perspective of an Asian refiner. Since 2021, it would be more cost-efficient for a typical refiner to import WTI than Murban for much of the time.

Demand for U.S. crude oil may increase as it competes with other crude grades like Murban and Oman. Crude oil volatility has increased since the beginning of 2025, partly reflecting the continued uncertainty over demand plus increased supply. CME Group’s CVOL measure shows that volatility in crude oil is at the highest level since November 2024.

WTI futures closing prices in Asia have fallen in recent months as OPEC+ continues to pump more oil into the market. The latest data from CME Group shows that the closing price of NYMEX WTI Crude Oil has been falling month on month since the third quarter of 2023. The price of NYMEX WTI Crude Oil futures at the Singapore close has fallen from around $85 per barrel in October 2023 to around $60 per barrel as of mid-May 2025 before recovering slightly to reach $65 per barrel at the end of June 2025. The NYMEX WTI price in Asia (the “Asia marker”) is a key reference price for regional trading in the U.S. market where participants are able to fix the price of U.S. crude oil at the end of each trading day in Asia.

Indian refiners look set to purchase more U.S. crude oil, with May 2025 volumes reaching their highest level since August 2024 at around 11.2 million barrels, according to the latest report from S&P Commodity Insights. The growing demand for U.S. oil could be beneficial for NYMEX WTI futures through higher hedging volumes.

Indian oil demand growth in both 2024 and 2025 is expected to surpass other leading economies, which marks a period of rapidly changing patterns compared to prior years, the EIA noted in its recent short-term energy outlook report. According to data for 2024 and 2025, India accounted for 25% of total oil consumption growth globally. Total oil demand growth for 2024 was 0.9 million barrels per day before rising to 1.3 million barrels per day in 2025.

In 2025, Indian officials announced the country’s commitment to increase its annual consumption of U.S. energy from $15 billion to $25 billion, with LNG playing an important role. The strategic alignment is founded on two pillars: energy security and economic diplomacy.

U.S. LNG offers a relatively stable, reliable and geopolitically secure supply source to diversify from the traditional exporters—mainly Qatar and Russia. India has contracts with U.S. terminals, including Sabine Pass and Cove Point, and potential equity stakes in projects like Driftwood LNG. In addition, energy trade can serve as a diplomatic tool to address trade imbalances and potentially strengthen bilateral relations between the two countries.

The competitiveness of Henry Hub prices, which are used as the basis for long-term LNG purchase agreements, versus non-U.S. gas prices has helped to stimulate the surge in U.S. LNG exports. Some Indian importers are already securing long-term supply using Henry Hub prices. For example, Indian Oil Corp has signed a five-year LNG deal with Trafigura to lift 2.5 million metric tons of LNG priced on Henry Hub.

India’s journey toward energy security is a complex narrative interwoven with geopolitical considerations and economic realities and environmental concerns. The increasing adoption of U.S. benchmarks signifies not just a shift in trading practices, but a deeper integration into global energy markets. 

As Indian energy demand continues to expand, it is expected that the country will buy greater volumes of energy in the international markets. And as one of the largest producers, the U.S. is well-placed to benefit from growing Indian imports. This could further reinforce the role of NYMEX WTI and Henry Hub as the primary price reference benchmarks on the global stage.

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