The European Union (EU) has imposed sanctions on the Vadinar oil refinery in Gujarat, India, as part of its 18th sanctions package over Russia’s ongoing war in Ukraine. The refinery, operated by Nayara Energy and partly owned by Russian state-controlled energy giant Rosneft, which holds a 49.13% stake, has been targeted for its role in processing and exporting Russian crude oil. These sanctions, coupled with a lowered oil price cap, aim to curb Russia’s war revenues but could disrupt India’s energy market and global oil trade dynamics.

The EU’s latest measures focus on restricting Russia’s ability to fund its military operations through oil exports, a critical revenue source for the Kremlin. The Vadinar refinery, India’s second-largest single-site facility with an annual capacity of 20 million metric tons (405,000 barrels per day), is a key player in this trade.

Nayara Energy, formerly Essar Oil, processes significant volumes of Russian crude, which accounts for nearly 40% of India’s total oil imports. The sanctions prohibit Nayara from exporting refined fuels, such as petrol and diesel, to EU countries, closing a loophole that previously allowed Russian crude to reach Europe via third-country refineries.

Additionally, the EU has lowered the price cap on Russian oil from $60 to approximately $47.6 per barrel, aligning it with current global market prices. This cap, initially set by the G7 in December 2022, aims to limit Russia’s oil revenues while maintaining global energy supply stability.

The new sanctions also target Russia’s “shadow fleet” of over 400 aging tankers used to evade restrictions, as well as the Indian flag registry, enabling the EU to penalize Indian-flagged vessels involved in Russian oil transport. Two Chinese banks and the defunct Nord Stream 1 and 2 pipelines were also included in the sanctions package to further limit Russia’s financial and energy transactions.

EU foreign policy chief Kaja Kallas described the measures as one of the bloc’s strongest sanctions packages to date, stating, “We’re cutting the Kremlin’s war budget further, going after 105 more shadow fleet ships and their enablers, and limiting Russian banks’ access to funding.”

For the first time, we're designating a flag registry and the biggest Rosneft refinery in India.

Our sanctions also hit those indoctrinating Ukrainian children.

We will keep raising the costs, so stopping the aggression becomes the only path forward for Moscow. (3/3)

— Kaja Kallas (@kajakallas) July 18, 2025

The EU aims to ensure that stopping the aggression in Ukraine becomes the only viable path for Moscow. This move reflects a broader strategy to isolate Russia economically, but its success hinges on global cooperation and Russia’s ability to adapt through shadow fleets and alternative markets.