India looking for contingency measures as energy bill surges by 50% in April

Prime Minister Narendra Modi ordered immediate contingency plans to mitigate severe energy disruptions caused by the Middle East war and the Strait of Hormuz blockade in the cabinet's first meeting of the year, Press Trust of India reports. He directed ministers to aggressively explore alternative energy sources and fast-track structural reforms to insulate the economy from external supply shocks.

The prime minister’s directive comes as the war takes a toll on India’s energy import bill. Despite crude oil import volumes falling 4.3% y-o-y in April to 20.1 mmt, the total import bill soared by 50% y-o-y to USD 16.3 bn, as per data from the Petroleum Planning and Analysis Cell. This stark divergence, driven by a sharp escalation in global crude prices amid the ongoing Strait of Hormuz blockade, reflects the war’s severe strain on the country's trade balance.

LNG imports plummeted 30% to 1.9 bn cubic metres, dragging down the import bill to 900 mn from USD 1.2 bn a year earlier primarily due to lower consumption — triggered as the government cut supplies to commercial and industrial consumers.

Why it matters: While India tapped alternate supply sources to feedstock its oil demand even at steep prices, the lack of alternatives for gas imported from the Gulf region prompted rationing measures which wiped a significant chunk of the gas demand. Demand for natural gas declined by 16.7% y-o-y, while LPG sales fell 12.7% y-o-y in April due to the supply restrictions. Allocation for the commercial sector remains at 70% of their total utilization capacity as bottled gas was diverted to household usage.

Venezuela now a key swing supplier

Venezuela has leapfrogged Saudi Arabia and the US to become India’s third-largest crude supplier. Refiners like Reliance Industries are scrambling to keep the taps flowing amid regional disruptions, pushing Venezuelan shipments up to 417k bbl/d in May, a significant jump from 283k bbl/d in April, Economic Times reports, citing Kpler data.

IN CONTEXT- Venezuelan imports have roared back to life after sitting at zero for nine months. Indian refiners resumed imports after Washington rolled back export restrictions in February following the capture of President Nicolás Maduro following which Reliance acquired a license from US administration to import oil from the oil.

Why it matters:With Iranian cargoes halted again and Iraqi volumes still constrained, Venezuela has become an increasingly important stopgap supplier for Indian energy security. Imports from Saudi Arabia nearly halved in April, due to shipping disruptions and higher prices. While most Indian refiners can process limited quantities of heavier Venezuelan crude, it is particularly suitable for Reliance’s advanced Jamnagar refinery. This allows India’s largest refiner to cut down purchases of costlier MENA barrels and gain an edge against the state-run rivals.

Meanwhile, the Donald Trump administration is nudging India to buy more energy from the US and Venezuela as Secretary of State Marco Rubio heads to India for a four-day visit beginning Saturday. The visit aligns with Washington’s broader push to deepen energy ties with New Delhi, with Rubio touting Iran as a “great partner” and signaling a readiness to bump US energy exports to historic levels, NDTV reports.

“We also think there's opportunities with Venezuelan oil,” Rubio told the media while announcing that Venezuela’s interim President Delcy Rodríguez is slated to visit India next week to hash out new oil sales agreements.

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