The EU’s recent sanctions on the Rosneft-linked Nayara Energy refinery in Vadinar, Gujarat, announced on July 18, 2025, as part of its 18th sanctions package against Russia, have significant implications for global markets.  Nayara Energy’s Vadinar refinery, India’s second-largest, processes 20 million tonnes per year (400,000 barrels per day) and is 49.13% owned by Russia’s Rosneft. The EU sanctions ban Nayara from exporting refined products like petrol and diesel to European countries. India’s Ministry of External Affairs condemned the sanctions as “unilateral” and not recognized outside the UN framework, emphasizing energy security and rejecting “double standards” in trade.

Sanctions are economic measures imposed by the EU (or other entities) to influence the behavior of targeted countries, entities, or individuals, often in response to actions like human rights violations, aggression, or non-compliance with international law. They can include asset freezes, trade restrictions, or financial transaction bans.

The Vadinar refinery processes 17.6% of India’s Russian crude imports (51 million barrels in 2025 so far). Sanctions disrupt this supply chain, potentially raising costs for Indian refiners like IOCL and BPCL, which rely on discounted Russian crude (35–40% of India’s imports). This could reduce refining margins and increase fuel prices globally. The ban on Nayara’s exports to Europe, combined with a lower oil price cap, may force India to seek alternative crude sources (e.g., Middle East), increasing logistics costs and tightening global oil supply. This could push Brent crude prices up, as seen in 2022 when similar sanctions caused a 7% price spike. Disrupting a major refinery like Vadinar risks tightening global fuel supply, increasing prices for consumers and industries, especially in Europe, which relies on imported refined products. Higher refining and shipping costs could cascade, impacting global trade and inflation, particularly for energy-intensive sectors.

Data from the UN and NGOs like Human Rights Watch has shown that sanctions can exacerbate poverty and limit access to medicine, raising ethical concerns about their blunt nature. Financial terrorism  is      deliberate, malicious disruption of economies or financial systems to cause harm, often with connotations of illegality or extremism.

Sanctioning oil is not a good business idea. Oil refineries are critical for processing crude into usable products like gasoline, diesel, and jet fuel. Sanctions on major refineries (e.g., in Russia, Iran, or Venezuela) can reduce global supply, driving up prices.  EU sanctions on Russian oil post-2022 Ukraine invasion led to a 7% spike in Brent crude prices in Q1 2022, per OPEC data. Reduced refinery output tightens markets, increasing costs for consumers and industries. This can fuel inflation, as seen in 2022 when global oil prices hit $120/barrel, partly due to sanctions-related disruptions. Sanctions can reroute global oil trade, forcing reliance on alternative suppliers (e.g., Middle East or U.S.), which may lack capacity or face logistical bottlenecks. This strains shipping and refining networks, raising costs.

Higher energy prices impact manufacturing, transportation, and agriculture, slowing economic growth. The IMF noted a 0.5% drag on global GDP in 2023 due to energy market disruptions, partly linked to sanctions. Sanctions often aim to pressure specific regimes without collapsing global markets. For example, EU sanctions on Russian refineries were paired with exemptions for certain countries (e.g., Hungary) to stabilize supply.

Sanctions can act as a form of economic warfare, disproportionately harming civilians, destabilizing economies, and creating humanitarian crises. For example, broad sanctions on countries like Iran or Venezuela have led to shortages of essential goods, inflation, and suffering among populations.

Though sanctions are intended to be  legitimate, non-military tool to enforce international norms, deter aggression, or protect global stability, they may end up being unjustifiable and a means for political agenda for the West. Though  they’re designed to target specific actors—like oligarchs, governments, or industries—while minimizing civilian harm, this precision often ends in debate of its legitmacy. EU sanctions on Russia post-2022 Ukraine invasion targeted energy and banking sectors, aiming to weaken Moscow.  The EU insists these measures are lawful, transparent, and subject to oversight but have been arbitrary.

Galactik Views