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India’s Russian oil worries
The European Union’s 18th sanctions package (July 2025) significantly tightens financing restrictions on Russian oil and other energy resources from Moscow. And no sooner were the sanctions made public, debates and discussions on what happens to a buyers like India have started.
But India has now sturdily expanded its energy basket, while pushing for more green energy, though strategic storage capacity is still not enough to deal with long-term crises.
On July 18, Randhir Jaiswal, Spokesperson of the Ministry of External Affairs, had tweeted “We have noted the latest sanctions announced by the European Union. India does not subscribe to any unilateral sanction measures. We are a responsible actor and remain fully committed to our legal obligations.
“Government of India considers the provisions of energy security a responsibility of paramount importance to meet the basic needs of its citizens. We would stress that there should be no double standards especially when it comes to energy trade.”
The latest EU sanctions package aims to tighten the pressure on Russia’s oil revenues by lowering the price cap on Russian crude from $60 to $47.6 per barrel — now pegged at 15 per cent below the global average and reviewed every six months, according to Umud Shokri, Energy Strategist and Senior Foreign Policy Advisor.
The sanctions also include refined petroleum products such as diesel and petrol that are processed from Russian crude — even if refined outside Russia, such as in India — and ban their entry into the EU.
“Over 100 vessels from Russia’s shadow fleet have been blacklisted, and enforcement has intensified, making it harder to use intermediary countries or disguised shipping routes to bypass restrictions,” he said.
For India, the most immediate impact is on private refiners, especially firms such as Nayara Energy that have strong Russian links.
“India’s fuel exports to Europe — primarily diesel — have already declined, dropping from $19.2 billion in FY24 to $15 billion in FY25. Up to $5 billion more in exports are now at risk. While public sector refineries are not directly targeted in this round of sanctions, the increased scrutiny of supply chains and tighter compliance requirements may create future challenges, especially if enforcement extends to vessels or intermediaries involved in Russian-linked trade,” he said.
“However, for the broader Indian economy and most domestic oil buyers, the practical effect remains limited. India continues to import discounted Russian crude, which supports domestic energy needs and cushions inflation. Moreover, Indian refiners can reroute some exports to Asia or Africa, albeit with lower profit margins and higher transport costs,” he said adding “So while the new EU measures don’t disrupt India’s energy security or overall trade posture for now, they do signal a growing risk environment for Indian exporters tied to Russian oil, with future rounds of enforcement potentially carrying broader consequences.”
Finance factor
Even if logistics is worked out how will Indian refiners get the finance for trading with Russia as the sanctions extend beyond traditional financial channels?
“…EU and G7 entities are now banned from providing financing, insurance, shipping, brokering, or technical support for Russian crude or petroleum products sold above the $47.6/barrel price cap — regardless of destination. The package also imposes full transaction bans on a broader list of Russian banks and refiners, including those linked to shadow fleets and third-country intermediaries. Newly added asset freeze measures block access to EU financial services and markets for targeted firms with no wind-down periods,” he said.
“This aims to disrupt layered or disguised financing structures. The European Commission has also mandated stricter enforcement through price cap audits, regular reviews, and closer monitoring of circumvention tactics like falsified attestations or fraudulent paperwork,” he said.
“In practice, this forces mainstream EU/G7 banks and insurers to withdraw entirely from high-risk Russian oil transactions. Blacklisted firms lose access to EU capital, trade finance, and settlement systems,” he added.
He agreed that while countries like India may still import Russian oil using non-Western channels, reliance on Western insurers or shipping services may expose them to secondary sanctions or operational disruptions. “These measures significantly restrict Russia’s ability to access global finance for oil exports while raising compliance burdens worldwide,” he said.
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