Nayara Energy Struggles to Secure Non-Russian Crude Amid EU Embargo

The solvent refining enterprise, Nayara Energy – part-owned by Russia’s eminent oil behemoth Rosneft PJSC and subject to a European Union embargo since July – finds itself in a challenging predicament, struggling to secure non-Russian crude for the second consecutive month. This is due to Western maritime carriers declining to transport crude for it, as revealed by ship tracking data. The Gujarat-based refinery in Vadinar, responsible for processing up to 400,000 barrels of crude per day, has had to reduce its operational capacity due to the lack of adequate supplies, with dependency on Russian oil increasing since August.

This increased reliance on Russian crude is evident in the data obtained from the globally recognized trade analytics firm Kpler. According to their preliminary observations, Nayara procured approximately 242,000 barrels per day (bpd) of Russian oil in August, a figure that looks like it was achieved with help from Moscow’s arranged shipping. This trend didn’t cease in September either, with the company obtaining another 332,000 bpd within the first fortnight.

Intriguingly, Nayara received no crude oil during August and September from other crucial contributors, notably Iraq and Saudi Arabia. This oil, usually reduced into more manageable fuels like petrol and diesel at Nayara’s refinery, wasn’t forthcoming, a contrast from the prior months. A case in point is July, when Iraq and Saudi Arabia had contributed around 120,000 bpd of crude to Nayara’s operations.

Yet, the oil corporation’s situation remains fraught with challenges in the face of persisting sanctions. These sanctions have only heightened Nayara’s dependence on Russian oil. Post-sanctions, the company has grappled with facets like compliance, shipping logistics, payment channels, and an overall lower crude import. On a positive note, these problems are gradually being tackled, with operations expected to return to practical or rated capacity.

In July, the European Union decided to prohibit imports of petroleum products derived from Russian crude starting from January 2026. Moreover, the EU decreased its oil price ceiling. At the same time, it imposed sanctions on Russian and international firms managing ‘shadow fleet’ vessels – a secondary flotilla involved in clandestine operations –, dealers of Russian crude oil, and chief buyers, one of whom is the Vadinar refinery, boasting a 49.13 per cent stake from Rosneft.

A potent direct consequence of these sanctions was the refusal by non-Russian shipping fleets to transport oil for Nayara. In addition, Western insurance corporations opted not to provide coverage for the oil barrels earmarked for Nayara’s operations. These EU sanctions created a domino effect leading to several key executives from Nayara, including the CEO, stepping down from their positions.

Despite the increasing pressure from the United States for India to distance itself from Moscow’s supplies in a bid to persuade Russian President Vladimir Putin to call a halt to hostilities in Ukraine, Russian oil kept streaming into India through September. Kpler data signifies that Russia continues to be India’s largest crude supplier, being accountable for over one-third of India’s total imports.

It’s relevant to note that because oil deals are typically arranged 6-8 weeks earlier, the oil shipments that arrived in India during August and the beginning of September are the result of negotiations that took place back in July. Hence, the actual effects of fresh hurdles, whether they involve tariffs, payment issues, or shipping friction, are only anticipated to emerge starting from the latter part of September or perhaps in October.

Consistent supplies from West Asia, including countries like Iraq, Saudi Arabia, and the UAE, were observed through September. This serves as an indication of India’s strategic efforts to strike a balance. It has been striving to mediate between the allure of discounted Russian grades of oil and the reliability of traditional oil supplies – an endeavor to safeguard its energy security and mitigate the risk of overexposure to geopolitical escalations.

Regarding Russian crude shipments to India in August and September, Kpler traces a dip in numbers. Recordings reveal about 1.45 million bpd in August and 1.3 million bpd in September, until the 12th of the month. These numbers represent a drop from the 1.774 million bpd average seen in the initial seven months of 2025. It’s pertinent to bear in mind that these figures could still fluctuate, considering that several vessels en route for Port Said might alter their ultimate destinations while traversing the crucial Suez Canal.

This pivotal route is instrumental in facilitating Russian oil shipments to India. In fact, all Russian flow to India in July was facilitated by the Suez Canal. As cargoes loaded in August are projected to offload in September and October, following vessel movements in the coming weeks should provide further insights into the current scenario.

Recent findings by Kpler suggest an increase in undisclosed shipments departing from Russian ports. A significant portion of these tankers previously made their last two to three deliveries in India, indicating robust oil flow continuity, though potential diversions to other Asian buyers remain on the table.

Historically, India has been heavily dependent on crude coming from the Middle East. However, in the aftermath of Russia’s invasion of Ukraine in February 2022, India notably boosted oil imports from Russia. Deep discounts on Russian barrels ensuing from Western sanctions and dwindling European demand offered a lucrative potential for Indian refiners, who inflated their purchases from a meagre 1 per cent to a notable 40 per cent within months.

Although Russian barrels are more economical for India (with the per barrel cost cheaper by 3 to 5 USD compared to other sources), Indian refiners appear unlikely to halt their Russian supplies harbor abruptly. A healthier diversification is predicted as the refiners seek to strike a balance between affordability and energy security. Without a formal mandate from New Delhi, it is improbable that refiners would overlook even a marginal discount of USD 1 per barrel.

At present, it seems like it’s largely business as usual, though with prudent awareness and a more emphatic emphasis on diversification as energy security takes centre stage. However, the evolving geopolitical landscape and the resultant changes in global oil commerce continue to make the crude oil market an arena of persistent fluidity.