On July 21, 2025, the European Union (EU) announced sanctions against India-based energy giant Nayara Energy as part of the 18th sanctions package against Russia. The reason given was that “the company provides capital and distribution channels to Russia’s energy sector”. However, Nayara Energy reacted to this decision and accused Europe of “violating international law” and “interfering in the internal affairs of sovereign states”.[i] This development has exposed deep geopolitical fault lines that will lead to the questioning of Europe’s position and energy diplomacy in the fragile balances of the multipolar global order.
In the coming years, the EU’s sanctions-based approach to energy policy is expected to have decisive effects not only on the target countries but also on the structural dynamics of global energy diplomacy. The quest for strategic autonomy, especially by rising powers such as India, may accelerate the development of regional and multilateral alliance mechanisms against such unilateral sanctions. Europe’s role as a global norm-setter, on the other hand, may be further questioned by third country actors’ objections based on international law and sovereignty. Accordingly, new geopolitical balances shaped around energy security, trade law and multipolarity are expected to lead to new alignments not only between states but also between companies and blocs.
The EU’s imposition of direct sanctions on an Asian energy company will further solidify India’s long-standing approach of “strategic autonomy”. Despite its defense cooperation with the United States, New Delhi has increased its energy imports from Russia and has not complied with Western sanctions. Sanctioning Nayara Energy could create the impression that a “red line” has been crossed for India. This could push India to forge closer energy and trade blocs with China and Russia. India could take the lead in institutionalizing sanctions bypass mechanisms in platforms such as BRICS+. The proliferation of non-SWIFT payment systems and the rise of rupee-based transactions in India-Russia trade are the first signs of this process.
The EU has long played a global norm-setting role in the areas of climate crisis, energy transition and human rights. But penalizing third country companies based on its own foreign policy interests could undermine this legitimacy. Nayara Energy’s statement directly criticizes the EU for “violating international trade law”. This approach could be seen as a “new kind of colonialism” by many countries in Africa, Latin America and Southeast Asia. A direct contradiction between Europe’s development agenda in these regions and its geopolitical leverage could seriously undermine the EU’s soft power.
The Nayara Energy sanction will accelerate Russia’s strategy of institutionalizing non-European alternatives in energy sales routes. Russia has already increased its gas and oil shipments to countries such as China, India and Turkey, replacing pipeline projects such as Nord Stream with an “energy push to the East”. India is not only a new market in this sense, but also an actor that has become functional in systematically circumventing Western sanctions. Russia can challenge the European sanctions architecture by exporting “relabeled” oil and derivatives through India to Asian and African markets.
The Nayara example signals an era in which energy companies become not only commercial but also geopolitical actors. In the post-2026 era, an anti-Western “energy solidarity” could emerge between companies like Rosneft, CNPC, Saudi Aramco and Petronas. Thanks to the diplomatic shield of their national governments, these companies could develop strategies to transact independently of European financial instruments. This could lead to a polarization in the energy market, not only between states but also between companies.
This crisis will trigger new debates on the scope and legitimacy of economic sanctions in international law, particularly in the United Nations system. The emphasis on “illegality” in Nayara Energy’s objection could trigger a dispute procedure at the World Trade Organization (WTO). This could test the EU’s legitimacy in the multilateral trading system. If the WTO decides that the sanctions should be judged according to neutral trade rules rather than the EU’s domestic law, this precedent could also challenge other European sanctions.
In the aftermath of the Nayara Crisis, the debate on security of energy supply in Europe may also reignite. In particular, eastern-dependent members such as Hungary, Bulgaria and Slovakia may argue that Europe’s foreign policy priorities clash with its energy security needs. This may lead to a reorientation of energy policy in Europe from “centralized decision-making” to “multi-layered alignment of interests”. Failure to achieve a common strategy on energy within the EU would also undermine the internal legitimacy of the Green Deal.
Nayara Energy is a supply chain hub in India working with numerous subcontractors in the petrochemical and distribution sectors. EU sanctions on this company will not only affect the energy sector, but also the chemical, plastics, logistics and financial sectors. This will indirectly hurt European companies due to the “spillover effect” of the sanctions. In particular, the operations of companies such as BP, Total and Shell in the Indian market could be affected. This may lead to a renewed discussion of sanctions within the European business community.
In the continuation of this process, India is likely to take steps to develop its own payment systems in global finance and energy trade, not limited to the Nayara example. Under the BRICS+ umbrella, actors such as Russia, China, Brazil and South Africa are expected to establish non-SWIFT transaction networks and expand regional payment systems that will eliminate the need for dollar transactions. These steps will lay the foundations of a new economic system based on sanctions resistance, while questioning the Western-centered financial hegemony.
As a result, the EU’s sanctions against Nayara Energy will deepen the multipolar energy order by pushing not only Russia but also rising powers such as India to the opposite front. The EU’s direct sanctions on third country companies could undermine its global legitimacy and reinforce the perception of “neo-colonialism” in Southern countries. By strengthening non-Western payment systems within the BRICS+ framework, India could become the pioneer of a new economic system based on sanctions resilience.
[i] “Nayara Energy views EU sanctions as groundless, ignoring international law”, TASS, https://tass.com/world/1992277, (Accessed: 24.07.2025).
