Russia Lifts Oil Export Forecast Even as EU Tightens LNG Squeeze

Russia's economy ministry raised its 2025 oil export forecast to 240.1 million tons this week, up from a prior estimate of 229.7 million tons, a revision that reflects how effectively Moscow has rerouted seaborne crude to Asia since European buyers retreated. Total hydrocarbon export revenues were revised up to $206.1 billion from $200.3 billion, though the 2026 figure was cut to $215.2 billion from $220.4 billion — suggesting Moscow expects near-term demand to be front-loaded. The upward revision matters for Urals differentials and Atlantic Basin crude flows. Russian exporters have absorbed Western restrictions largely by adjusting freight and discount pricing to clear barrels in India and China; the question is whether that adjustment capacity is durable. Gas tells a different story. Pipeline exports outside the former Soviet Union are now expected to fall 10.7% this year to 72 billion cubic metres. Russian gas accounted for 45% of EU imports in 2021; it now accounts for 18%. Gazprom posted nearly $7 billion in losses in 2023 — its first annual loss since 1999 — and there is no near-term pricing fix available for a structural market exit of that scale. LNG sits in between. The EU adopted a ban this week on terminal services for Russian companies and prohibited maintenance work on Russian LNG tankers and icebreakers. Russia's LNG exports are now expected to rise only 3% this year, to 35.7 million metric tons, below earlier projections. The restrictions are biting at the margins — particularly for Arctic LNG 2, which relies on specialist icebreaker support — though they stop well short of a full supply disruption. The more consequential test for the sanctions architecture is whether the price cap coalition stays intact. Japan imported 747,706 barrels of Russian crude from the Sakhalin-2 project in January, following an eight-month halt. Idemitsu confirmed buying a Sakhalin cargo, citing supply diversification. The volumes are modest — Japan sources roughly 9% of its LNG from Sakhalin-2 and historically sourced around 95% of its crude via Middle East routes — but Tokyo has effectively decided that energy security outweighs coalition discipline. India is the sharper challenge. Indian refiners were taking close to 2 million barrels per day of Russian sour crude, representing 35-40% of the country's total crude imports, with discounts that widened materially after the 2022 invasion. Under US pressure — including tariffs imposed in August and Congressional legislation proposing levies of up to 500% on buyers of Russian oil — refiners have cut Russian orders by an estimated 40-50%. That still leaves substantial volumes flowing, and if US enforcement softens or gets traded away in broader negotiations, those orders could recover quickly. Tighter pressure on Russian supply routes would push the Urals discount wider in the near term but ultimately support Brent as Atlantic Basin buyers face higher replacement costs. Diesel remains the exposed product, given the refining profile of Sakhalin crude and Russian sour grades more broadly. Watch whether the US follows through on secondary tariff measures against Indian buyers — any enforcement signal, or any carve-out granted as part of US-India trade talks, would move Indian refiner order books and Urals differentials within days. The EU LNG services ban takes effect imminently and its practical impact on Arctic LNG 2 cargo schedules will become visible within the next two to three loading cycles. Japan's next monthly crude import data will indicate whether the Sakhalin resumption is a one-off or the beginning of a steadier flow.