Indian authorities have approved four foreign-flagged vessels for Nayara Energy's coastal shipment of refined fuels like petrol and diesel, easing domestic supply disruptions caused by European Union sanctions imposed in July. The Directorate General of Shipping granted the clearances to maintain fuel flow from Nayara's Vadinar refinery in Gujarat to key west coast hubs, including Maharashtra, Mangalore, Chennai, and Odisha, where the company supplies about 8% of India's total fuel consumption. Two ships are already operational, a third is set to join shortly, and the fourth is expected within days, helping stabilise supplies ahead of the festival season's demand surge. Unlike other refineries, Vadinar relies entirely on maritime transport rather than pipelines, making these approvals critical for its 400,000 barrels-per-day operations.

The EU's 18th sanctions package, announced on July 18, targeted Nayara due to its 49.13% ownership by Russia's Rosneft, aiming to curb Moscow's energy revenues amid the Ukraine conflict. The measures banned imports of Russian-refined products from January 2026, lowered the oil price cap to $47.6 per barrel, and blacklisted shadow fleet vessels, prompting shipowners to avoid Nayara over fears of secondary sanctions and insurance denials from European-based Protection and Indemnity clubs. This halted exports—typically 25-30% of output—and domestic coastal lifts, forcing the refinery to cut run rates to 70-80% capacity and store over 1.2 million barrels of products on sanctioned vessels. Nayara has since sourced crude exclusively from Russia via supplier-arranged ships, forgoing supplies from Iraq and Saudi Arabia due to payment hurdles.

Dollar-denominated overseas trade remains paralysed, as banks refuse to process payments for exports or provide foreign exchange for non-Russian crude imports, exacerbating storage constraints. UCO Bank was designated to facilitate these transactions via its UAE partner, Mashreq Bank, but the latter declined, citing compliance risks. The finance ministry is now finalising operational details, including currency options, with UCO—experienced in Iran oil trades—leading efforts to resume flows. Domestic rupee-based purchases continue uninterrupted, and Nayara has ramped up supplies to Hindustan Petroleum Corporation Ltd (HPCL), which relies on the refiner to meet retail shortfalls. The company has also turned to "dark fleet" tankers for transport and local IT alternatives after Microsoft suspended services.

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Nayara, formerly Essar Oil and rebranded in 2017, operates over 6,750 retail outlets and aims for 8% of India's polypropylene capacity. The sanctions prompted the resignation of several European executives, including CEO Thomas Thune Andersen, who was replaced by Sergey Denisov. Both Nayara and Rosneft have condemned the measures as "unjustified" and a threat to India's energy security, exploring legal challenges. India has criticised the EU for "double standards" in energy trade, emphasising its strategic needs. As the refinery seeks government aid for maintenance gear from non-Western sources, the episode highlights tensions in global oil flows, with Nayara pivoting to domestic focus while navigating sanctions' ripple effects.

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