Taking a new set of punitive measures against Russia for its war against Ukraine, the European Union on Friday imposed sanctions on the Indian oil refinery of Russian energy major Rosneft and lowered the oil price cap.
In addition to this, the fresh sanctions include new banking restrictions and ban of Nord Stream pipelines.
Russia will now have to sell its crude oil at much lower rates to buyers like India than the current price cap of $60 per barrel. India, which imports over 35% of Russian oil, is expected to benefit from the lower price cap, as it will help in reducing its import bill.
“For the first time, we’re designating a flag registry and the biggest Rosneft refinery in India,” EU foreign policy chief and Vice President of the European Commission Kaja Kallas said in a post on X.
She added, “Nord Stream pipelines will be banned. A lower oil price cap. We are putting more pressure on Russia’s military industry, Chinese banks that enable sanctions evasion, and blocking tech exports used in drones.”
Nayara Energy’s export restrictions add pressure on domestic refining sector
Rosneft owns a 49.13% stake in Nayara Energy Ltd, formerly Essar Oil Ltd. Nayara owns and operates a 20 million tonne a year oil refinery at Vadinar in Gujarat as well as over 6,750 petrol pumps.
Nayara cannot export fuel such as petrol and diesel to European countries post these sanctions.
“We are standing firm. The EU just approved one of its strongest sanctions package against Russia to date,” Kallas said. “We’re cutting the Kremlin’s war budget further, going after 105 more shadow fleet ships, their enablers, and limiting Russian banks’ access to funding.”
In December 2022, the Group of Seven (G7) nations imposed a $60 a barrel price cap on Russian oil in order to restrict Russia’s oil revenues to limit its funding for war against Ukraine.
The EU did not specify the new price cap. The move comes amid lower crude oil prices which have been hovering around $68-70/bbl.
The US also recently said it could impose 100% tariffs on Russia and “secondary tariffs” on countries importing its oil – mainly India and China – if Russia didn’t agree to a deal to end the Ukraine war in 50 days.
The EU’s move to sanction a Rosneft-linked refinery in India—a key crude-supply hub for IOCL and BPCL—is a strategic jolt for the domestic downstream sector, said Anirudh Garg, Partner and Fund Manager at INVasset.
India’s oil imports and refining margins may face ripple effects
India imported roughly 1.75 million barrels per day of discounted Russian crude in the first half of 2025, with Russia supplying around 35% of total imports. In June alone, this surged to 2 million bpd—the highest in nearly a year—while Middle Eastern sourcing declined sharply. IOCL and BPCL individually refinanced over one-third of their crude slate from Russia.
“The sanction announcement disrupts this finely calibrated supply chain. Even though the measure targets a single facility, it may trigger ripple effects—restricting access to Russian crude via banking channels, shipping insurance, or logistical bottlenecks. That would undercut the premium discount India’s refiners currently enjoy and strain refining margins. Moreover, IOCL and BPCL could face an incremental cost of swapping Russian volumes for costlier Middle Eastern or US crudes, at a time when global cracks are tightening,” Garg said.
Given the banking, shipping, and regulatory complexities inherent in executing sanctioned barrels, both public refiners may have to hedge via term deals, diversify sourcing, or pass on costs.
Garg pointed out that with earnings season around the corner, investor sentiment may turn cautious until clarity emerges on policy support, sanction waivers, or alternative supply routes. For now, this sanction is a downside risk—firm but containable, provided mitigating measures follow swiftly.