India’s energy bill is rising even as oil imports fall

India imported less crude oil in August, but that did not translate into a lower energy burden. Crude imports fell 3% year-on-year to 19.01 million tonnes from 19.60 million tonnes a year earlier. Yet the value of those imports rose more than 18%, from about $9.9 billion to $11.7 billion. The divergence captures the central problem facing India’s energy economy: the country can reduce the quantity of crude it buys, but a surge in the price of every barrel can still sharply increase the dollar cost of keeping the economy supplied.

The pressure intensified within August itself. Crude imports fell 11.2% from July’s 21.41 million tonnes to 19.01 million tonnes. At the same time, India’s crude basket averaged $90.19 a barrel in August, compared with $69.11 a year earlier. That is a price increase of roughly 30%, large enough to overwhelm the effect of lower import volumes. Disruptions around key shipping routes, alongside higher freight and war-risk insurance costs, added to the cost of sourcing energy.

The demand numbers complicate the picture further. India’s fuel consumption fell 6.3% month-on-month to 18.61 million tonnes in August, its lowest level since September 2024. On a year-on-year basis, petroleum-product consumption declined 2.8% from 19.1 million tonnes. The fall in crude imports, therefore, coincided with softer domestic fuel demand rather than signalling a structural break in India’s dependence on imported oil.

India’s refining trade is also showing signs of pressure. Petroleum-product imports rose more than 9% month-on-month to 2.72 million tonnes, although they were nearly 40% below August 2025. Meanwhile, product exports fell more than 13% year-on-year to 4.92 million tonnes. Jet-fuel exports dropped over 28%, petrol exports 15% and diesel exports nearly 19%. The data indicate that weaker fuel demand is affecting both domestic consumption and the external trade in refined products.

Yet the headline crude bill does not tell the whole net-energy story. India’s net oil-and-gas import bill remained at about $9.3 billion in August, unchanged from a year earlier, as crude imports worth $11.7 billion and LNG imports of $1.2 billion were partly offset by roughly $5 billion in petroleum-product exports. That distinction matters: the immediate pressure is not simply that India is importing more energy, but that the cost and composition of its energy trade are becoming more sensitive to global prices and supply disruptions.

That vulnerability also feeds into the currency market. The rupee was trading around ₹95.95 to the dollar, while the Reserve Bank’s special foreign-currency mobilisation programme drew $136.4 billion, including $127.2 billion through FCNR(B) deposits. The inflow gives India a larger foreign-exchange cushion, but it does not eliminate the recurring demand for dollars created by energy imports.

The larger financial signal is therefore clear: India’s energy vulnerability cannot be measured only by how many barrels it imports. In August, fewer barrels still produced a substantially larger crude bill. For an economy that remains heavily dependent on imported oil, sustained energy-price shocks can feed simultaneously into the trade balance, foreign-exchange demand, inflation risks and the rupee. The immediate numbers suggest that India’s energy challenge is increasingly about the cost of securing supply, not merely the volume of supply.