Indian refiners unfazed by European Union's new Russia oil sanctions

Fuel export to Europe is already on decline after record 2023

Indian refiners are relatively unconcerned by the European Union’s (EU) new round of sanctions on exports of Russian oil and the banning of purchases of fuels made from Russian grades, according to conversations with state-owned and private refiners, industry participants, and exclusive ship-tracking data.

 

Private-sector refiners — against which the latest EU sanctions package is primarily directed — such as Nayara, have already found ways to circumvent these sanctions, market intelligence data shows. Also working in favour of Indian refiners and banks is New Delhi’s strong stance against the EU’s 18th sanctions package, along with a parallel move by the North Atlantic Treaty Organization to impose tariffs on India, calling them out as “double standards”. 

 

There are three key elements to the EU’s 18th package of economic and individual restrictive measures: Bringing Russian state-owned Rosneft’s 400,000 barrels per day (bpd) Nayara refinery in Gujarat under sanctions; barring EU imports of fuels made from Russian oil; and lowering the price cap on Russian oil, making it more difficult to access Western shipping services.

 

The EU has banned imports of refined petroleum products made from Russian crude oil when exported from any third country, except Canada, Norway, Switzerland, the United Kingdom, and the United States.

 

More broadly, India’s fuel exports to Europe, mainly diesel and jet fuel, have been on a downward trajectory after reaching a record 318,000 bpd in 2023, according to data accessed by Business Standard from maritime intelligence agency Kpler.

 

Indian exporters have lost European market share to US suppliers, with fuel exports declining by 28 per cent this year compared with 2023. This was largely driven by Houthi attacks on Indian tankers in the Red Sea, prompting longer and more expensive diversions, a senior refining official said. 

 

Nayara’s operations

 

An official familiar with Nayara’s operations said the company is not concerned about the new sanctions because most of its activities are domestic. Some of Nayara’s fuel is sold through its 6,800 outlets across India, and substantial volumes are supplied to state oil companies, which will continue to purchase the fuel, a senior state-run refining official said.

 

Nayara’s exports to Europe are minimal. The company exported just 9,000 bpd directly to Europe in 2024 and the first half of 2025, ship-tracking data shows. This accounts for just 7 per cent of Nayara’s total exports and 4 per cent of India’s total fuel exports to Europe.

 

Reliance remains the dominant player in India’s fuel exports, accounting for nearly 90 per cent of exports to Europe and over 70 per cent of total petroleum product exports.

 

“The EU appears to be scraping the bottom of the barrel now for punitive actions against Moscow,” said Vandana Hari, Singapore-based global energy expert. “I don’t see how it can be implemented except as a blanket ban on product imports from China, India and Türkiye, as those countries import Russian crude. Even then, these products can find their way into EU markets via third countries.” 

 

Nayara may have found ways to circumvent the latest sanctions, according to market reports. UK-based information provider Energy Intelligence reported a “highly unusual” jet fuel tanker movement to West Asia from Vadinar in India. However, jet fuel is almost certainly not required there, given that West Asia is itself a major exporter.

 

Reliance purchased around 600,000 bpd of Russian oil this year, according to Kpler data; Nayara bought 283,000 bpd. These purchases account for around 46 per cent and 69 per cent of the crude processed in FY25 at Reliance and Nayara, respectively, based on calculations by Business Standard using shipping and oil ministry data.

 

Reliance may need to provide a paper trail for its European fuel exports, said R Ramachandran, an oil industry consultant and former head of refining at Bharat Petroleum. However, he added that exports will continue. The company exported 202,000 bpd to Europe this year, which could easily have been supplied from the 630,000 bpd of non-Russian crude it imported and processed this year, according to calculations using Kpler and oil ministry data.

 

Lowering the price cap on Russian crude oil from $60 to $47.60 per barrel does not impact India unless Washington endorses it, industry officials said. Any reduction in the cap will reduce tanker availability and push up shipping rates, said Darshan Ghodawat, CEO of AVA Global Logistics. Shipping costs from Russia’s Baltic ports to India had dropped last month after Western shipowners re-entered the market as rates fell below the $60 per barrel cap. The new price cap will likely push EU providers of shipping and insurance services out of Russian trade, but is unlikely to drive prices down by another 15 per cent, Hari added.

 

New Delhi does not recognise sanctions imposed by the EU or UK, a senior government official told Business Standard. India will only officially recognise UN sanctions, the official said, adding that the country continues to buy as much as 2 million bpd of Russian crude, around 35–40 per cent of its total imports.

 

Responding to a question during a fireside chat at Urja Varta in Delhi last week on how India plans to respond to rising sanctions on Russia, Indian oil minister Hardeep Singh Puri said: “It’s not sanctioned, first of all. No, it has never been sanctioned.”