India has authorized four foreign-flagged vessels to transport fuel produced by Nayara Energy along the country’s west coast, addressing logistical challenges faced by the EU-sanctioned company. The Directorate General of Shipping approved these ships to facilitate the coastal movement of fuel to major consumption centers such as Maharashtra, Mangalore, Chennai, and parts of Andhra Pradesh and Odisha. This decision aims to ease domestic supply disruptions caused by earlier shipping restrictions.
Despite this progress on the domestic front, Nayara Energy’s international trade remains severely constrained due to ongoing banking restrictions. The company, which owns a 20 million tonnes per year oil refinery in Vadinar, Gujarat, supplies fuels like petrol and diesel to Hindustan Petroleum Corporation Ltd (HPCL). Since August, Nayara has been sourcing crude oil exclusively from Russia, as banks have refused to process payments for crude oil from other suppliers like Iraq and Saudi Arabia.
The Indian government has instructed UCO Bank to create a mechanism to facilitate dollar payments for Nayara’s crude imports and fuel exports. However, UCO Bank has expressed its inability to move forward after its UAE correspondent bank, Mashreq Bank, declined to process transactions linked to Nayara. This disruption in dollar payment channels is a significant hurdle in Nayara’s non-Russian overseas trade.
These challenges stem from sanctions imposed by the European Union in response to the ongoing Ukraine conflict. In July, the EU banned imports of petroleum products made from Russian crude, effective January 2026. The sanctions also targeted Russian and international firms managing shadow fleet vessels, traders of Russian crude oil, and Nayara Energy itself. These sanctions have disrupted Nayara’s operations and led to the resignation of several company executives.
While the approval of vessels for domestic fuel supply offers some relief, Nayara Energy continues to face substantial obstacles in its international trade due to persistent dollar transaction restrictions and broader geopolitical sanctions. The company’s ability to navigate these challenges will be critical to maintaining its position in India’s fuel market amid ongoing global uncertainties.
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