In a significant development for India’s energy sector, Saudi Arabia and Iraq have halted crude oil shipments to Nayara Energy, a major Indian refinery partly owned by Russian oil giant Rosneft. The move comes in the wake of new European Union (EU) sanctions on Nayara, as the US pushes for India and Russia oil trade to be cut off. The Middle east too is now looking to back the West and the US in this goal.
According to sources familiar with the matter, Saudi Aramco and Iraq’s state oil marketer SOMO ceased deliveries in late July 2025, citing complications arising from EU sanctions. The sanctions, imposed due to Nayara’s links with Russian state-owned entities, have disrupted the company’s payment mechanisms, insurance cover, and shipping access.
The refinery, located in Gujarat, India operates one of the largest facilities in India, with a capacity of 400,000 barrels per day. However, due to the supply disruption, it is now functioning at 70–80% of its capacity.
Tensions between India and the United States are escalating over the Russia-India oil corridor. President Donald Trump’s administration recently imposed up to 50% tariffs on Indian goods, linking tariff relief to India’s willingness to reduce Russian crude imports. White House trade adviser Peter Navarro even suggested India could “get 25% off” its tariffs if it ceased Russian purchases.
India’s Oil Minister Hardeep Singh Puri dismissed accusations that India is acting as a middleman for Russian oil in global markets. “India is not profiteering; we are ensuring global energy stability,” he stated at a press briefing in Delhi.
Saudi Arabia and Iraq back Sanctions
Both Saudi Arabia and Iraq have maintained a neutral stance publicly, emphasizing that their decisions are commercial and compliance-driven rather than politically motivated. However it seems the two are now toeing the western line to put pressure on India to delink from Russia.
A spokesperson for Saudi Aramco stated, “Our crude oil sales and shipments comply fully with applicable international laws and sanctions. We continue to support our customers globally within the boundaries of these regulations.”
Similarly, Iraq’s State Oil Marketing Organization (SOMO) noted, “Iraq adheres to all international sanctions frameworks and maintains a policy of non-interference in geopolitical disputes. The suspension of shipments to Nayara Energy is a direct consequence of compliance requirements related to EU sanctions.”
India’s Next Moves: Russia, Iran, and Beyond
The cutoff by Saudi Arabia and Iraq raises the question: How will India offset the supply loss?
1. More Oil from Russia
India is expected to double down on Russian crude, especially given Rosneft’s stake in Nayara. The supply chain is already established, with increasing use of the so-called “dark fleet”—a network of ships operating without transponders or under flag-of-convenience registries to mask the origin of cargoes. While riskier and more expensive in terms of insurance, this approach allows India to maintain energy flow without breaching Western sanctions directly.
2. A Return to Iranian Crude?
Another strategic pivot could be a resumption of oil imports from Iran, which were halted in 2019 under U.S. pressure. While U.S. sanctions on Iran remain intact, Tehran has been quietly ramping up exports to China, and some reports suggest India–Iran backchannel talks on crude purchases via rupee-rial trade are underway.
A revival of Chabahar Port collaboration—a key geostrategic project—may offer additional leverage for India to re-engage with Iran on energy cooperation, especially if the U.S. softens its Iran stance in future negotiations.
3. Diversification Push
India will also likely expand its sourcing from Latin America and Africa, including countries like Brazil, Nigeria, and Angola. While more expensive and logistically complex, this move could reduce India’s reliance on politically sensitive suppliers.
The disruption of Nayara’s crude supply is a clear example of how US pressures are affecting global supply lines. With the Middle east looking to be in the good books of US and the West it has opted to target the India Russia Oil Trade as well.
Faced with rising tariffs from the U.S. and the loss of key Gulf suppliers for Nayara, India is now weighing strategic options—from deepening its Russian energy ties, to exploring a revival of oil trade with Iran, and pursuing broader diversification to safeguard its energy future. The clash over sanctions is now developing into a geopolitical issue that is bound to redraw the global oil trade.
