Iraq's SOMO, Saudi Aramco halt crude oil sales to Nayara Energy after Indian refiner sanctioned by EU - sources

Iraq's SOMO, Saudi Aramco halt crude oil sales to Nayara Energy after Indian refiner sanctioned by EU - sources

BAGHDAD (Reuters) - The State Oil Marketing Organization (SOMO) of Iraq and Saudi Aramco have suspended crude oil sales to Nayara Energy, an Indian refiner, following the European Union's sanctions on the company. The sanctions, imposed due to alleged violations of EU regulations, have disrupted Nayara Energy's operations and affected its supply chain.

The sanctions, which took effect on June 20, 2025, restrict Nayara Energy's access to Western shipping and insurance services for oil sold above a certain threshold. This has led to a shortage of crude oil supplies for the refinery, prompting SOMO and Saudi Aramco to halt their sales to Nayara Energy [1].

The move comes as the European Union continues to tighten its grip on Russian oil exports, imposing a price cap on Russian crude. This cap, introduced in late 2022, has restricted access to Western shipping and insurance services for oil sold above the threshold, effectively limiting the availability of crude oil for certain refineries, including Nayara Energy [1].

The disruption in crude oil supplies has had a ripple effect on the global market, with freight rates for Russian crude shipments from Baltic ports to India rising significantly. The cost of shipping Urals crude from Baltic ports such as Ust-Luga to India has climbed to about $6 million per one-way trip, up from $5.3 million to $5.5 million in July and early August [1].

Despite the sanctions, Western shipowners have returned to the Russian oil market in 2025, as Urals prices have largely remained below the $60 per barrel cap since early April. This has helped stabilize tanker availability and exert downward pressure on freight rates [1].

The situation highlights the complex interplay between geopolitical tensions, regulatory environments, and global energy markets. As the EU continues to impose sanctions on Russian oil exports and other entities, the impact on the global supply chain and energy prices will remain a key area of focus for investors and financial professionals.

References:
[1] https://www.globalbankingandfinance.com/RUSSIA-OIL-EXPORTS-33d19277-9149-41e2-a98c-a10e7b345455