Russia Lifts Oil Export Target as Asian Buyers Absorb European Rejects

Russia has raised its 2025 oil export forecast to 240.1 million tons from 229.7 million tons, an upward revision that reflects how effectively Asian refiners have replaced European buyers — and how much pressure Moscow is under to monetise crude after its gas revenues collapsed. The gas numbers tell the story plainly. Russian gas now covers just 18% of European imports, against 45% in 2021. The oil share of EU supply has fallen to 3% from roughly 30% over the same period. Gazprom posted losses of nearly $7 billion in 2023 — its first annual loss since 1999 — and pipeline exports outside the former Soviet Union are forecast to fall a further 10.7% this year to 72 billion cubic meters. Moscow's crude book has become the revenue backstop. Japan's return to Sakhalin-2 purchases illustrates where that backstop finds its buyers. After an eight-month halt, Japan took 747,706 barrels from the project in January, the first delivery since roughly 650,000 barrels arrived the previous May. Idemitsu confirmed it bought the cargo specifically to diversify import sources. The transaction carries significance beyond its volume: Japan was paying above the G7's $60-a-barrel price cap, a departure Washington's European allies have declined to match. Russia's ambassador made the terms explicit — sanctions would need lifting before supply could expand at scale — but Japan has navigated around that by limiting purchases to Sakhalin-2 volumes it treats as strategically exempt. The logic is partly commercial and partly about energy security. Sakhalin-2 supplies roughly 9% of Japan's LNG imports and about 3% of its power generation. With around 95% of Japanese oil imports transiting the Strait of Hormuz, the Sakhalin volumes are a diversification hedge rather than a price play. Europe's western flank is also shifting, if slowly. Hungary's election — which ended Viktor Orbán's 16-year hold on power in favour of Peter Magyar's Tisza party — is expected to pull Budapest closer to EU energy policy. New economy minister Istvan Kapitany faces constraints that will make any move away from Russian gas and oil gradual. But the direction is set, and it incrementally narrows Moscow's remaining western options. The gas side of Moscow's pivot faces a larger unresolved problem. Power of Siberia 2 talks with China have stalled over pricing: Beijing has reportedly pushed for terms at Russia's domestic rate of around $120-130 per 1,000 cubic meters, while Moscow wants pricing in line with the existing Power of Siberia 1 contract. Without a deal, Russian pipeline gas has no alternative market of scale to replace lost EU volumes. That gap explains Moscow's urgency to move oil by tanker — a market where buyers are dispersed and increasingly willing to absorb the discount. Ukraine's gas storage position adds a separate variable for European TTF this winter. Kyiv is targeting 14.6 billion cubic meters in underground storage by autumn — 34% of capacity — with a minimum floor of 13.2 bcm that reflects ongoing Russian strikes on Naftogaz infrastructure. Any significant shortfall against that threshold would support a winter risk premium. The pivotal unknown is whether Power of Siberia 2 pricing can be resolved: a deal near domestic Russian rates would ease pressure on the oil book and materially change Moscow's revenue calculus. Japan's Sakhalin-2 purchase cadence is the clearest live proxy for G7 price cap enforcement; further transactions above $60 from Idemitsu or JXTG would confirm the regime has lost operational force. Russia's ability to deliver against its revised 240.1 million ton target will show whether the eastward pivot is building capacity or running into tanker and insurance constraints.