The European Union’s latest move to prohibit petroleum products that are processed from Russian-origin crude, even if they are refined in third countries, is likely to prove a heavy blow to India’s fast-growing fuel export sector.
In its 18th sanction package against Russia, the EU has added a clause prohibiting the import of any refined petroleum product if it is determined to have been produced from Russian crude. The legal text requires exporters to the EU to provide “verifiable evidence” that their fuels are not of Russian origin—a direct challenge to Indian refiners, who have sharply increased imports of discounted Russian oil in the last two years.
Probable Effects on Indian refiners
India, the world’s third-largest crude importer, has emerged as a major re-export center for refined fuels to Europe. India shipped $19.3 billion worth of petroleum products to the EU during 2023–24, much of which had been processed from Russian crude. Exports may shrink by $10–12 billion if Indian exporters fail to meet the origin rules after the new EU norms from January 21, 2026.
Heavyweights such as Reliance Industries and Nayara Energy (which is owned partially by Russia’s Rosneft) are expected to be affected the most. Nayara, especially, is under regulatory examination as it continues to import large amounts of Russian crude into its Vadinar refinery. Reliance faces logistics hurdles in separating crude streams and demonstrating traceability.
India’s refining advantage at stake?
The compliance expenses are already a heightened caution, and potential re-routing of exports, shipping documentation among other issues can be a costly adventure. “India’s refining advantage was due to cheap Russian crude. These sanctions can negate that advantage,” an energy analyst added.
Although India has not yet joined the Western sanctions regime, the EU action may prompt a rethinking of trade policy. Increasing expectations of bilateral discussions or WTO consultations are aimed at safeguarding India’s economic interests.
As the EU doubles up on enforcement, Indian refiners now have to decide whether to give up access to low-cost crude or one of their most profitable markets for exports.
