In a significant move to intensify economic pressure on Russia amid the ongoing Ukraine conflict, the European Union has introduced a fresh round of sanctions that, for the first time, directly affect an Indian entity.

On July 18, 2025, the EU announced additional restrictions targeting Nayara Energy Ltd, a major refinery in India linked to Rosneft, the Russian energy giant.

“For the first time, we’re designating a flag registry and the biggest Rosneft refinery in India,” agencies quoted EU foreign policy chief Kaja Kallas as saying. India responded, saying it “does not subscribe to any unilateral sanction measures. We are a responsible actor and remain fully committed to our legal obligations.”

This action underscores the EU’s expanded efforts to curtail Russia’s ability to profit from its vast energy exports.

Key Sanctions And Their Immediate Impacts

Designation of Nayara Energy Ltd: Nayara, formerly Essar Oil Ltd, operates a massive refinery in Gujarat with a capacity of 20 million tonnes per year and manages over 6,750 retail fuel outlets. With Rosneft holding a 49.13% stake in the company, Nayara has been a significant processor of Russian-supplied crude.

The EU’s move blocks the export of refined products such as petrol and diesel from Nayara to any European countries, a direct consequence of what officials term Russia’s circumvention of earlier energy sanctions via third-party nations.

Targeting Russian Maritime Operations: The package blacklists 105 vessels labelled as part of Russia’s “shadow fleet,” which has been instrumental in secretly moving Russian oil globally to evade sanctions. This shadow fleet, small in 2023 with roughly 100 ships, has ballooned to an estimated 800 vessels as of 2025, reflecting Moscow’s aggressive attempts to maintain oil exports despite international restrictions.

Banking And Financial Restrictions: The EU has additionally excluded 20 more Russian banks from the international payments system. This builds on previous measures that froze about two-thirds of Russia’s $330 billion in central bank reserves, much of which is held in EU jurisdictions, especially Belgium.

Lowering The Oil Price Cap

Since December 2022, the G7 nations have enforced a price cap—originally at $60 per barrel—on Russian crude sold to third countries, restricting the use of Western insurance and shipping services for transactions exceeding the cap.

The EU’s new sanctions reduce this cap to $47.60 per barrel, aligning it more closely with current market rates. The strategy aims to shrink Russia’s oil revenues needed to fund its war effort, while seeking to preserve stability in global energy markets. This reduced cap could ironically benefit large Asian importers like India and China, both of whom have increased their purchases of discounted Russian oil.

Global And Regional Implications

Following the EU’s original embargo on Russian oil and gas, Russia pivoted its energy exports towards the Asian market. India has been a major beneficiary, emerging as Russia’s top oil buyer and accounting for roughly 35% of its crude oil imports over the last two years. The current sanctions mark the first punitive EU action that directly involves an Indian company in the Russian oil supply chain, signalling a tightening of enforcement and a new phase in the broader sanctions regime.

Strategic Rationale

The EU’s comprehensive measures are prompted by persistent concerns that, despite a complex web of existing sanctions, Russia continues to earn meaningful revenue from its energy trade, thereby sustaining its military campaign in Ukraine.

By expanding restrictions to include important third-country players and by blacklisting additional vessels and banks, the EU aims to close sanctioned loopholes while also reasserting Western leverage over global energy flows.

The latest EU sanctions represent a pivotal escalation in the West’s economic confrontation with Russia, affecting not just direct Russian exports but also key partners in the global energy network. The targeting of Nayara Energy sets a new precedent for future sanctions policy as Western countries seek to tighten the noose on Russia’s war economy.

Based On New Indian Express Report