Two weeks ago, Exxon Mobil Corp. (NYSE: XOM) announced a major milestone, reaching 500 million barrels of oil produced from Guyana’s offshore Stabroek block. This achievement came just five years after the company began production at the site. Exxon’s first three projects—Liza Phase 1, Liza Phase 2, and Payara—are now producing over 650,000 barrels per day. The Exxon-led consortium, which includes Hess Corp. (NYSE: HES) and China’s Cnooc (OTCPK: CEOHF), is aiming to boost production to 1.3 million barrels per day by the end of 2027. This goal will be reached as six additional offshore projects come online.
Now, one of the world’s largest oil consumers, India, is looking to Guyana’s light and sweet crude to help secure its energy future. During a recent visit to Guyana, Indian Prime Minister Narendra Modi emphasized that his government sees Guyana as a key partner for India’s energy security. Modi, speaking before the Guyanese Parliament, expressed his interest in strengthening energy ties with the small South American nation and encouraged Indian businesses to invest in Guyana’s growing oil industry.
However, Guyana has not yet agreed to Modi’s request. India’s External Affairs Minister, Jaideep Mazumdar, stated that discussions are ongoing, and any deal would bring “greater predictability” to energy supplies. Guyanese Natural Resources Minister Vickram Bharrat clarified that Guyana is open to supplying India with significant quantities of oil, but this depends on approval from Exxon Mobil, the dominant player in Guyana’s offshore oil production.
Bharrat noted that Exxon’s operations, which favor very large vessels capable of carrying two million barrels due to distance and cost considerations, would need to adjust their logistics and lifting schedule for such an arrangement to work. He also pointed out that Guyana is keen for Indian companies to bid for oil blocks, and negotiations can move forward once a formal bid is submitted.
India, which has recently emerged as the largest buyer of discounted Russian oil, may seem an unlikely candidate to pursue crude from a distant country like Guyana. India’s imports of Russian oil reached a record 2.07 million barrels per day in July, surpassing China’s 1.76 million barrels per day. However, energy security has become a growing concern for India, which faces soaring energy demand and limited domestic resources.
Despite the attention on Russian oil, India remains heavily reliant on Middle Eastern oil, which accounted for 44.6% of the country’s crude imports in August—up from 40.3% in July. Iraq, Saudi Arabia, the UAE, and Kuwait are India’s major oil suppliers from the region. In contrast, Russia’s share of India’s oil imports has fallen to 36%, marking a decline after five months of increases. India also imports nearly half of its liquefied natural gas (LNG) from Qatar. In February, India’s Petronet LNG and QatarEnergy signed a 20-year LNG supply agreement valued at $78 billion, further strengthening the energy ties between the two nations.
India’s geostrategic position, with control over two critical maritime chokepoints—the Malacca and Hormuz Straits—enhances its role in global energy security. The Strait of Hormuz, between Oman and Iran, is the world’s most important oil transit route, through which more than 85% of India’s oil imports pass. Meanwhile, the Malacca Strait is another key trade route, vital for global oil and economic activity. Together, these straits account for over 60% of the world’s oil shipments and a third of global trade, underscoring their strategic significance.
Meanwhile, global oil prices saw a drop of over $2 per barrel on Monday following reports that Israel and Lebanon had agreed on terms to end their ongoing conflict. A senior Israeli official indicated that the country’s cabinet would meet to approve a ceasefire deal, with a Lebanese official stating that an announcement could come “within hours.” Despite this, oil supply in the region has not been disrupted, and analysts suggest that the risk premium on oil has already been low.
UBS analyst Giovanni Staunovo linked the price drop to news of a potential ceasefire but noted that no immediate disruptions had occurred due to the Israel-Hezbollah conflict. Though the situation could signal de-escalation, U.S. officials remain cautious, citing previous setbacks in ceasefire negotiations. Furthermore, Israel’s increase in air strikes on Lebanon after news of the ceasefire deal raises doubts about the stability of the situation.
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