On July 27 and 28 2025, U.S. President Donald Trump and European Commission President Ursula von der Leyen announced a major trade agreement that is already affecting energy markets of the world. The deal sets a 15 percent import tariff on almost all EU goods entering the United States. This is a huge drop from earlier threats of tariffs which were estimated to be as high as 30 or even 50 percent on industries like automobile and steel. It also allows for zero tariff arrangements for certain “strategic” goods like aircraft parts, key raw materials, chemicals, semiconductors, and some agricultural products.[1]
One of the key aspect of the deal is the EU’s promise to buy U.S. energy products, including liquefied natural gas (LNG), crude oil, and nuclear fuel. The purchase amounts are expected to fall between 150 billion and 750 billion dollars over three years. Some predictions place the yearly target at 250 billion dollars, but many analysts see that as too ambitious since the EU imported only about 64 billion dollars’ worth from U.S. energy sector in 2024.[2]
Still, the announcement had an immediate impact on the markets. Brent and WTI crude futures options rose by about 0.3 percent and 0.34 percent, respectively.[3] This reflects optimism that easing trade tensions would increase and boost fuel demand. U.S. energy exporters are set to gain significantly. The American shale boom has made producers and refiners in U.S. more cost-competitive, making them capable to sell crude and refined fuels globally at good margins. In contrast, refiners in Europe are struggling to compete, especially in the diesel and gasoil segments, leading to a loss of both regional and global market share.
For EU policymakers, the deal is about decreasing reliance on Russian energy sources. Due to ongoing geopolitical instability after the Ukraine conflict, Europe sees the U.S. as a more reliable supplier. By committing to U.S. energy imports, the EU hopes to gradually reduce ties with Russian LNG and crude. The scale and logistics required to meet these goals, however, may be unattainable, according to numerous experts. The agreement leaves strategic options open and gives Brussels some time to look for alternative energy contracts.
India, now the world’s second-largest crude importer, is closely following these events. A small amount of the nation’s energy comes from the United States, but the majority comes from a range of suppliers, including the Middle East Countries and Russia. About $5 billion worth of U.S. oil was imported by India in 2024, while $51 billion came from Russia and $28 billion from Iraq.[4] Global competition for LNG and crude may intensify now as the EU has secured significant U.S. energy purchases.
For Indian buyers, this might result in reduced availability or higher prices. Since India already depends largely on energy imports, it might have to pay more or find other sources if a significant portion of US LNG is diverted to Europe. Contract terms, shipping costs, and pipeline costs may all be impacted, as well as the larger Asian energy markets.
India is responding by diversifying its energy mix. It is expanding its renewable capacity in solar, wind, hydro, and biomass and is also exploring more affordable and reliable resources. With Europe shifting its focus to the U.S, India may have to strengthen its energy ties with Middle Eastern and CIS (Commonwealth of Independent States) nations. Investments in LNG regasification terminals and storage facilities are also part of its strategy to build flexibility and resilience.
Market participants worldwide have welcomed the deal as a sign of easing tensions relating to World Trade. Oil traders in Europe and Asia saw reduced risks and Crude prices stabilized after a period of decline.[5] However, many economists caution that the deal lacks a formal treaty structure. Several details relating to key sectors need to be finalized, and there looms a risk that it could collapse if either side fails to meet its purchasing or investment commitments.[6]
In short, this new EU-U.S. trade framework is changing the global energy landscape. While producers in U.S. are in a position to benefit from an export surge and the EU has a strategic leverage against Russian energy, the shift could create new challenges for India. Nonetheless, with its ongoing efforts toward energy diversification and increasing supplier flexibility, India is in a strong position to manage the impact, provided policymakers remain alert about the shifting geopolitical and market conditions.
[1] European Commission Press Release, ‘EU–US Trade and Technology Council: Joint Statement,’ July 28, 2025.
[2] Bloomberg News, ‘EU Energy Imports from U.S. in 2024 Hit $64 Billion,’ July 2025.
[3] Reuters, ‘Oil Prices Edge Higher on U.S.–EU Trade Deal Hopes,’ July 28, 2025.
[4] Ministry of Commerce, Government of India, ‘Annual Crude Oil Import Statistics 2024,’ released June 2025.
[5] Financial Times, ‘Oil Markets Stabilize as EU–US Agreement Calms Trade Fears,’ July 28, 2025.
[6] The Economist, ‘The EU–US Trade Framework: Promise and Peril,’ July 2025.
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