India, the world’s third-largest oil importer and consumer, has recorded a sharp decline in crude oil imports in July 2025, hitting an 18-month low and raising questions about the country’s energy security, economic demand, and geopolitical strategies. According to data released by the Petroleum Planning and Analysis Cell (PPAC), crude oil imports fell by 8.7 percent month-on-month to 18.56 million metric tonnes (MMT), compared to 19.40 MMT in July 2024, marking a year-on-year drop of 4.3 percent. This is the lowest import level seen since February 2024.

The slowdown in imports has coincided with reduced fuel consumption, falling petroleum product trade, and changing dynamics in India’s global energy partnerships. The latest numbers underline both opportunities and risks for the country’s economy and energy policy.

Crude oil imports for July stood at 18.56 MMT, while petroleum product imports declined 12.8 percent year-on-year to 4.31 MMT. Petroleum product exports also fell by 2.1 percent to 5.02 MMT. Fuel consumption dropped by 4.3 percent month-on-month to 19.43 MMT, highlighting weakening domestic demand. On the financial front, India’s oil and gas import bill decreased to 9.4 billion dollars in July 2025 from 11.4 billion dollars in July 2024, mainly due to lower global crude prices and reduced volumes. Out of this, crude oil imports accounted for 9.3 billion dollars. The Indian basket crude averaged 70.95 dollars per barrel in July, compared to 84.15 dollars a year ago, while Brent crude fell from 85.31 dollars in July 2024 to 70.99 dollars this year.

Several factors explain this downturn in crude oil imports. First, domestic fuel demand weakened during the monsoon season, reducing the need for high-speed diesel, petrol, and LPG. Second, refiners took advantage of falling crude prices to optimize inventories instead of rushing to import more. Interestingly, despite lower imports, crude oil processing actually increased by 3.2 percent year-on-year to 23.3 MMT, with public sector and joint venture refiners processing 15.8 MMT and private refiners 7.5 MMT, showing efficiency in refinery operations. 

Third, geopolitical factors also played a key role. The United States imposed 25 percent duties on Indian shipments and announced further tariffs of up to 50 percent from August 27, 2025, primarily in response to India’s reliance on discounted Russian oil. This has pushed Indian refiners to adopt a cautious approach.

Russian oil, which accounted for around 35 to 40 percent of India’s imports in 2025, saw a sharp drop in July. Imports fell 24.5 percent month-on-month to 1.5 million barrels per day as discounts narrowed and seasonal demand slowed. In contrast, imports from the United States surged by 51 percent between January and June 2025, with a 114 percent year-on-year increase in the April–June quarter. The U.S. share of India’s crude imports rose from 3 percent to 8 percent by July 2025, reflecting a strategic shift. Iraq and the UAE also remained critical suppliers, with OPEC’s overall share rising to 51.5 percent.

Commerce Minister Piyush Goyal has stated that India will continue managing its trade relationship with the U.S. pragmatically. Meanwhile, state-run refiners like IOC and BPCL are planning renewed purchases of Russian oil for September and October 2025 to take advantage of larger discounts. Nayara Energy, partly owned by Russia’s Rosneft, is also leveraging the so-called “dark fleet” to bypass sanctions and export refined products.

The decline in imports comes at a time when India’s dependency on foreign oil has reached new highs. Between April 2024 and February 2025, crude imports met 88.2 percent of total consumption, up from 87.7 percent in the previous year. Domestic production continues to decline, falling 0.7 percent to 2.4 MMT in July 2025 and maintaining a long-term downward trend of 3 percent annually since FY17. To counter this, the government has earmarked 647 million dollars for Strategic Petroleum Reserves in the 2025-26 budget. ONGC has also partnered with BP to boost production from India’s largest oil field, targeting a 44 percent increase in oil output and an 89 percent rise in gas production over the next decade.

In terms of petroleum product trends, consumption in April–July 2025 was 81.0 MMT, slightly lower than the 81.4 MMT in the same period of 2024. July alone saw a 4.2 percent year-on-year drop to 19.4 MMT. However, there was growth in LPG at 7.5 percent, motor spirit at 6.8 percent, aviation turbine fuel at 2.3 percent, and high-speed diesel at 2.6 percent. Ethanol blending in petrol rose to 19.9 percent, reflecting progress in cleaner fuel adoption. Petroleum product production in July was 24 MMT, down 1.5 percent year-on-year. Exports of products fell slightly by 0.2 percent in July but rose marginally in the April–July period, supported by higher shipments of naphtha and motor spirit.

On the trade balance front, the reduced oil import bill helped narrow pressures, but India’s overall merchandise trade deficit still widened to 11.7 billion dollars in July 2025, with exports at 37.2 billion dollars and imports at 64.6 billion dollars. The services surplus provided some relief, but the rupee continues to face stress due to rising import bills and global uncertainties.

Looking ahead, the fall in crude oil imports offers short-term economic relief by easing the current account deficit, but the country remains highly vulnerable to supply shocks and price volatility given its 90 percent import dependence. India’s strategy now hinges on diversifying suppliers, managing trade relations with both Russia and the U.S., and boosting domestic production. At the same time, environmental goals, such as ethanol blending and gradual demand moderation, show a shift toward cleaner energy sources.

 With fuel demand projected to rise from 4.05 million barrels per day in FY22 to 7.2 million barrels per day by 2030, India must carefully balance its energy, economic, and geopolitical priorities in the years to come.