A stable nanofluid (NF) is crucial for success of nano-enhanced oil recovery (nEOR) processes. However, this represents a significant challenge as nanoparticles (NPs) tend to agglomerate under high salinity and NP concentration adversely affecting the oil recovery. New nanomaterials including functionalized nanoparticles also known as nanocomposites (NC) can help to overcome these issues. In this paper, first, we reported synthesis, characterization, and performance evaluation of a novel hydrophobic CuO-SiO2-Montmorillonite-K+-Thiazine NC for the first time. The NC was characterized using Scanning Electron Microscopy (SEM), Energy Dispersive X-Ray Analysis (EDAX), X-Ray Diffraction (XRD), Thermogravimetry Analysis (TGA), and Fourier Transform Infrared Spectroscopy (FTIR). SEM analysis showed that the NC is composed of uniformly distributed NPs. EDAX results confirmed presence of Cu, SiO2, O2, and Cl in the NC. XRD analysis indicated that SiO2 is the dominant phase in the crystal lattice and responsible for adsorption capacity of the NC. TGA analysis showed that the NC will be thermally stable in typical reservoir temperatures (∼80°C). FTIR results confirmed presence of Si-O, Cu-O, Si-O-Si, Al-O-Si, Al-OH, and OH bonds in the NC. In the second phase of this research work, the novel NC was used to investigate recovery of a Kazakhstani paraffinic heavy crude oil from Berea sandstone with focus on IFT reduction, oil recovery, wettability alteration, and stability analysis of the NFs. NFs were prepared with NC concentrations of 250, 500, and 1,000 ppm using moderate salinity (MS), low salinity (LS), and distilled water (DW). The results showed that the optimal NF (250 ppm LS) exhibited a high zeta potential value (−65.5 mV) indicating a high stability which is superior to all of the previously reported NCs. This high stability is attributed to use of thaizine as a source of natural surfactant. The optimum NF also altered the wettability of the sandstone by 77.6% and the contact angle (CA) was reduced from 117.9° to 26.4° making the system strongly water wet. The nanoclay has significantly facilitated the wettability alteration. The optimum NF also reduced the IFT by 92.3% from 27.42 mN/m to 2.11 mN/m. An incremental oil recovery of 20% was also achieved in the tertiary or EOR stage of oil. A comparison with the NCs reported in the literature confirmed the excellent performance of this novel NC in terms of NF stability, IFT reduction, and wettability alteration. The novel NC has a great potential for nEOR and other oilfield and environmental applications.