Sanctions Relief Expected to Increase Nayara's Volumes, but Margins Remain a Concern

Nayara Energy to Benefit from Lifting of Russian Crude Sanctions

Nayara Energy, a 20 million tonne a year oil refinery operator in Gujarat, is expected to regain some volumes following the lifting of sanctions on Russian crude oil buying by India. However, analysts predict that margins will not return to pre-war levels due to narrowing discounts on Russian oil.

Nayara has benefited from discounted Russian barrels over the past two years, with imports rising from 226 kbd in 2023 to 302 kbd in 2025, according to data from Kpler. The company's crude oil imports from the Middle East have steadily declined since 2017, from 185 kbd to 71 kbd in 2025, coinciding with Rosneft's acquisition of Nayara Energy in August 2017.

Nayara's total crude imports averaged around 340 kbd up to March 24, with 100% of intake sourced from Russian barrels. Analysts note that the lifting of sanctions is unlikely to materially change Nayara's crude slate or operations, as the refinery has already been fully reliant on Russian crude since August last year.

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Russian Crude to the Rescue

The recent lifting of restrictions on Russian crude is expected to unlock spare capacity to meet rising demand. Russian floating oil is making up a sizable portion of the Indian crude basket, with the rest contributed by other sources such as the US, Africa, and potentially Iran.

India purchased about 30 million barrels of Russian crude after receiving a temporary waiver from the United States, allowing refiners to access discounted oil. The sudden spike comes after imports hit a 44-month low in January 2026 due to sanctions risk.

Impact on Indian Oil Marketing Companies

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The shift to Russian crude in 2022 was a lifesaver for Indian oil marketing companies (OMCs) like BPCL, HPCL, and IOCL, which had been facing severe difficulties due to record-high global crude costs. By pivoting to discounted Russian oil, OMCs drastically lowered their "break-even" point.

Volume Boost, but Not Margins

Analysts expect the private refiner to redirect its export volumes to India amid the intensifying Middle East conflict and the effective closure of the Strait of Hormuz, which have severely disrupted global fuel supply chains. However, margins are unlikely to return to pre-war levels due to narrowing discounts on Russian oil, with Russian crude now sold at a 10% premium.

Financial Performance

Nayara reported revenue from operations of Rs 1.55 lakh crore and a net profit after tax of Rs 12,085 crore in FY25, compared with a revenue of Rs 1.50 lakh crore and profit after tax of Rs 6,061 crore in the previous year.