Sanctions from Europe have now started to impact India. Earlier, it was mainly the US, particularly under President Trump, that targeted countries importing Russian oil. But now, Europe has also joined in. For the first time, the European Union (EU) has imposed sanctions on one of India’s major refineries linked to Russian oil.
India’s export numbers remain strong and are growing steadily — just like its GDP.
But the big question is: Could these sanctions slow down India’s growth story? And is this truly bad news for refining companies? Let’s unpack the issue.
What’s Happening?
On Friday (July 18), the EU announced a ban on importing fuels made from Russian crude if routed through third countries. Exceptions apply only to Canada, Norway, Switzerland, the UK, and the USA. This move is expected to directly impact India’s fuel exports to Europe, as a significant share of India’s crude oil imports comes from Russia.
In addition, the EU has imposed sanctions on Indian oil refiner Nayara Energy, which operates a large refinery in Gujarat and is partially owned by Russian oil giant Rosneft, which holds a 49.13% stake. As a result, Nayara Energy is now barred from exporting petroleum products to Europe and could face restrictions in doing business with European companies.
To increase pressure on Russia, the EU has also lowered the price cap on Russian oil transported by sea — from $60 to $47.6 per barrel. This is aimed at cutting Russia’s oil export revenues and intensifying pressure to end the war in Ukraine.
India’s Petroleum Exports to Europe
According to the economic think tank GTRI, India’s fuel exports to Europe dropped from $19.2 billion in FY24 to $15 billion in FY25 — a sharp 27.1% fall. This decline coincides with the EU’s tighter sanctions against Russia, particularly the ban on fuels made from Russian crude — even when refined in third countries like India.
The Global Trade Research Initiative (GTRI) warns that nearly $5 billion worth of India’s fuel exports to Europe may now be at risk. This could pose new challenges for Indian refiners that rely heavily on Russian crude and export a large portion of their output to Europe.
Read More About India’s Dependence on Crude Oil
India Hits Back at EU’s Oil Sanction Threat
Union Oil Minister Hardeep Singh Puri has strongly criticised the EU for threatening sanctions on countries like India for buying Russian oil during the Ukraine conflict. He clarified, “The EU buys in one afternoon what India buys in a quarter”.
Speaking at the Urja Varta conference, he said that those issuing warnings are themselves major buyers of Russian energy. According to him, the EU buys 51% of Russia’s LNG exports, followed by China at 21% and Japan at 18%. He also pointed out that the EU purchases 37% of Russia’s pipeline gas, while China and Turkey account for 30% and 27%, respectively.
Puri questioned the fairness of the EU’s approach, highlighting that while Europe continues to import large quantities of Russian energy, it targets others for doing the same.
What Does This Mean for Investors?
India has around 23 refineries with a combined capacity of over 258.12 million metric tonnes as of April 2025. Nayara Energy, partly Russian-owned, contributes 7.75% to this capacity, while Indian Oil and Reliance together account for over 50%.
Both Reliance and Nayara process Russian crude, but so far only Nayara has faced EU sanctions. However, if the EU extends sanctions to other companies, the pressure will intensify.
As reported by The Indian Express, industry experts say it is still unclear how the EU will identify and track fuels made from Russian crude, since there’s no definitive method to trace the source.
Investors should stay alert, as any shift in EU enforcement could impact the revenues and export outlook of major Indian refiners.
What’s Next?
Russia is currently India’s largest crude oil supplier, accounting for nearly 40% of India’s total oil imports in FY25. With EU demand declining, Russian oil has been available at discounted rates — benefiting Indian refiners. India imported $50.3 billion worth of Russian crude in FY25, out of a total oil import bill of $143.1 billion. This helped Indian refiners boost exports, improve margins, and keep domestic fuel prices stable.
However, the EU’s new sanctions could disrupt this momentum. With 88% of India’s crude being imported, refiners may face higher input costs or risk losing access to key export markets due to their links to Russian oil.
If the EU expands its sanctions, Indian refiners could suffer profit hits and export losses, prompting the government to seek new crude suppliers and alternative export destinations.
*The companies mentioned in the article are for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
