EU sanctions on Russian oil may boost Indian refiners' reliance on traders for exports.

The EU's latest sanctions on Russia may force Indian oil refiners to rely more on traders to find new markets for their products, as they can no longer export refined products made from Russian crude to Europe. Indian private refiners like Reliance Industries and Nayara Energy, which have benefited from cheap Russian crude, will have to find workarounds. Traders are likely to play a bigger role in placing refined products made from Russian crude.

The European Union's latest round of sanctions against Russia, which includes a ban on refined petroleum products made from Russian crude, is set to significantly impact Indian oil refiners. Traders and industry sources indicate that Indian private refiners, such as Reliance Industries and Nayara Energy, which have benefited from cheap Russian crude, will now have to find alternative markets and rely more heavily on traders to facilitate these exports.

According to Reuters [1], the EU's 18th package of sanctions, approved on July 21, 2025, prohibits imports of refined petroleum products made from Russian crude coming from third countries, excluding a handful of Western nations. This ban, along with direct sanctions on Nayara Energy, a refinery backed by Russian oil major Rosneft, is expected to be phased in over six months.

Reliance Industries, India's largest buyer of Russian oil and refined products exporter, has shipped an average of 2.83 million barrels of diesel and 1.5 million barrels of jet fuel per month to Europe in the first seven months of this year. This accounts for nearly 30% and 60% of its respective exports of the two products [1].

Under the new sanctions, traders are expected to play a more significant role in placing refined products made from Russian crude. For diesel, traders may swap Indian supplies with Middle East cargoes for export to Europe or ship Indian cargoes to floating storage facilities in the Middle East or West Africa to be re-exported. For jet fuel, Indian refiners may either divert cargoes to local markets or ship supplies to Asia [1].

The changes will benefit traders by generating more trade flows but will be costly for producers and consumers. Europe, heading into winter, may have to pay higher prices for refined fuel, according to an Asian trader [1].

Nayara Energy, in a statement, condemned the EU's "unjust and unilateral" decision to impose sanctions on the company and said it was exploring legal options against the latest "restrictive measures" [2]. Indian state refiners, which also buy Russian crude, are likely to be less affected by the sanctions as they sell most of their fuel locally and export through tenders, mostly to buyers in Asia, including Singapore [1].

The EU's sanctions come amidst broader geopolitical tensions and may have broader implications for energy markets globally. The Indian government has pushed back against the sanctions, stating that energy security is of paramount importance and that India does not subscribe to unilateral sanction measures [3].

References:
[1] https://www.reuters.com/business/energy/new-eu-russia-curbs-may-bolster-indian-oil-refiners-reliance-traders-2025-07-21/
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3TI0RI:0-urals-oil-diffs-steady-as-traders-eyed-impact-of-new-european-sanctions/
[3] https://economictimes.indiatimes.com/industry/energy/oil-gas/eu-fuels-crude-awakening-for-nayara-energy-but-reliance-feels-the-heat-too/articleshow/122772142.cms?UTM_Campaign=RSS_Feed&UTM_Medium=Referral&UTM_Source=Google_Newsstand