Gulf Suppliers Cut Ties Amid EU Sanctions
Saudi Aramco and Iraq’s state oil marketing organization (SOMO) have halted crude oil shipments to India’s Nayara Energy, following the European Union’s July sanctions targeting the Russian-backed refiner. The suspension, confirmed by three sources familiar with the matter, has forced Nayara to rely entirely on Russian crude for its August imports, intensifying its isolation from traditional Middle Eastern suppliers. Nayara, majority-owned by Russian entities including Rosneft, previously received approximately 2 million barrels of Iraqi crude and 1 million barrels of Saudi crude monthly. However, Kpler and LSEG shipping data show zero shipments from these suppliers in August, underscoring the operational crisis triggered by the EU’s measures.
Payment Disruptions and Refinery Downturn
Sanctions-induced payment complications have crippled Nayara’s transactions with Iraqi supplier SOMO, though specific details remain undisclosed. The refinery’s last receipt from SOMO occurred on July 29 via the VLCC Kalliopi, while its final Saudi shipment arrived on July 18. Consequently, Nayara has reduced operations at its 400,000-barrel-per-day Vadinar refinery to 70–80% capacity due to difficulties in selling refined products under EU restrictions. The company controls 8% of India’s refining capacity but now faces severe logistical challenges, including reliance on shadow fleet tankers after mainstream shippers withdrew services.
Leadership Turmoil and Strategic Shifts
The sanctions precipitated the resignation of Nayara’s CEO in July, followed by the appointment of Teymur Abasguliyev, a former SOCAR executive, as the new chief executive in August. This leadership change occurs amid broader strategic pressures, including potential Rosneft divestment and Nayara’s pivot to non-EU markets in Africa, Latin America, and Southeast Asia. The EU’s sanctions include a six-month transition period for refined products, but Nayara’s reliance on Russian crude, 72% of its imports in 2024 leaves it vulnerable to further disruptions.
Geopolitical Implications for India
India’s energy security faces heightened risks as U.S. pressure to reduce Russian oil imports conflicts with its refining dependencies. President Trump’s 50% tariffs on Indian goods have strained bilateral relations, pushing New Delhi toward closer ties with China and BRICS nations. However, Nayara’s predicament reveals the limits of India’s strategic balancing act: sanctions have exposed critical vulnerabilities in its energy supply chain, forcing refiners into precarious reliance on Russian imports and shadow fleets. The situation underscores the broader challenge for emerging economies navigating Western sanctions amid great power competition.