Enhanced oil recovery (EOR) efficiency is fundamentally governed by multiphase flow dynamics in porous media, where capillary forces trapping residual oil pose a significant challenge. This review analyzes the efficacy of green nanofluids—specifically those based on the biopolymer xanthan gum (XG) integrated with plant-synthesized nanoparticles (NPs)—in manipulating key fluid-physics properties to overcome these capillary barriers. Experimental evidence is synthesized to demonstrate how these nanocomposites (NCs) induce substantial alterations in interfacial tension (IFT) reductions up to ∼94%, rock wettability (shifting contact angles (CAs) from ∼150° to ∼28°), and aqueous phase viscosity (enhancements up to ∼96%). The primary oil mobilization mechanisms are examined, with a focus on the generation of structural disjoining pressure, Pickering emulsion stabilization, and the resulting improvement in mobility control. A comparative analysis of various NCs (e.g., SiO2, ZnO, Fe3O4, TiO2 with xanthan) reveals that their synergistic interaction with low-salinity (LoSal) brines or surfactants can enhance recovery factors (RFs) by ∼11%–25% of original oil in place (OOIP), with hybrid systems achieving up to ∼70% in sandstone cores. The colloidal stability of these nanofluids under harsh reservoir conditions (salinity > 200,000 ppm, temperature > 90 °C) is also evaluated, highlighting the role of biopolymer capping in preventing aggregation. While these green nanofluids present an eco-friendly solution aligned with a circular economy, challenges such as nanomaterial aggregation and scalability are identified, suggesting the need for future research leveraging machine learning for fluid optimization and pore-scale modeling of transport phenomena. This work underscores the significant potential of xanthan-based green nanofluids as tunable physical agents for controlling fluid-fluid and rock-fluid interactions.