NEW DELHI: In a renewed effort to put economic pressure on Russia, the European Union on Friday unveiled a fresh package of sanctions, which includes lowering the price cap on Russian crude oil and sanctioning Nayara Energy Ltd, an India-based refinery linked to Russian energy giant Rosneft.
This marks the first time the EU has imposed sanctions involving India, a country that has heavily relied on discounted Russian crude since the start of the Russia-Ukraine war in 2022. Nayara Energy Ltd, formerly known as Essar Oil Ltd, operates a 20-million-tonne-per-year refinery in Vadinar, Gujarat, and manages a retail network of over 6,750 petrol pumps across India. Rosneft owns a 49.13% stake in the company.
As a result of the sanctions, Nayara will no longer be able to export refined products such as petrol and diesel to European countries.
“For the first time, we're designating a flag registry and the biggest Rosneft refinery in India,” said EU foreign policy chief Kaja Kallas.
The sanctions also blacklist 105 vessels from Russia’s so-called shadow fleet — a group of ships that covertly transport Russian oil while evading international sanctions. The shadow fleet, once estimated at around 100 vessels in 2023, has grown to approximately 800 ships by 2025, according to EU diplomatic estimates.
In addition to maritime sanctions, the EU’s package also cut off 20 more Russian banks from the international payments system. This builds on earlier sanctions that froze around two-thirds of Russia’s $330 billion in central bank reserves, much of which is held in the EU—particularly in Belgium.
The EU’s latest move comes amid growing concern that Russia continues to earn significant revenue from oil exports, despite existing sanctions. In December 2022, the Group of Seven (G7) nations introduced a $60-per-barrel price cap on Russian oil sold to third countries. Now, the EU is pushing for a lower cap of $47.60 per barrel, closer to current market prices.
Under the price cap mechanism, Western insurance and shipping services can only be used if Russian oil is sold at or below the capped price. The aim is to reduce Moscow’s war revenues while maintaining stability in global energy markets. Ironically, a lower price cap may benefit countries like India and China, which have significantly increased their imports of Russian crude.
After Europe halted purchases of Russian oil and gas following the attack on Ukraine, Moscow redirected its energy exports toward Asian buyers. Russia has since become India’s top oil supplier, accounting for around 35% of the country's crude imports over the past two years.