U.S., Russia vie for a bigger slice of the world’s third-largest energy

Hello, this is Priyanka Salve, writing to you from Singapore.

Welcome to the latest edition of “Inside India“ — your one-stop destination for stories and developments from the world’s fastest-growing large economy.

India’s growing energy requirements are becoming fertile grounds for a contest between the U.S. and Russia, as the two geopolitical rivals seek a bigger share of the world’s third-largest energy market. This week I spoke to energy experts to understand how the Iran war, trade deals and tariffs are reshaping India’s energy sourcing mix.

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India is becoming a prime market for the U.S. and Russia, as the two adversaries seek to gain a larger wallet share of the world’s third-largest energy consumer.

The South Asian country is the world’s third-largest importer of crude, fourth-largest buyer of liquefied natural gas, or LNG, and the second-largest importer of liquefied petroleum gas, or LPG.

While Russia wants India to continue buying its crude, despite mounting pressure of harsher U.S. tariffs, Washington has been pushing New Delhi to purchase Venezuelan oil to replace Russian barrels.

Experts told CNBC that replacing Russian crude at a time when supply from the Middle East is constrained would be “challenging” for New Delhi, even as the country ramps up purchases of Venezuelan crude.

“If U.S. and Venezuelan crude are combined, the Americas are becoming more important to India’s crude basket,” Sumit Ritolia, lead research analyst at market intelligence firm Kpler, told CNBC.

Indian refiners cannot replace Russian or Middle Eastern barrels with U.S. crude as it is of a “relatively light” variety, while several Indian refineries are configured to process medium and heavier crude, he said. The “heavier” quality Venezuelan crude solves that problem.

India’s Venezuelan crude imports have risen from zero in March to 383,000 barrels per day so far in August, according to Kpler data. Together with U.S. crude imports, the two sources accounted for about 11% of India’s crude imports over that period.

India’s top energy suppliers

On Monday, Russian President Vladimir Putin said that “Russia is expanding its exports [to India] and is ready to continue doing so,” hinting at Moscow’s increasing share of crude supplies to New Delhi. It is now India’s largest crude supplier, accounting for more than 50% of the country’s oil imports in June and July and nearly 43% in August so far, according to Kpler data.

Between April and July, Russian exports to India rose nearly 60% from last year, according to India’s latest trade data. But Moscow isn’t the only one gaining a larger share of India’s energy market.

The U.S. has become India’s top supplier of LPG, which is used as a…