Energy Sector News – September 4, 2025: Dampener Adjustment, EU Sanctions, and Far East Energy Development

Detailed Overview of the Energy Sector Events on September 4, 2025: Government Measures to Stabilize the Fuel Market (Adjustment of the Pricing Mechanism, Export Ban on Gasoline), New EU Sanctions Against the Russian Oil Sector, Energy Development Plans in the Far East, Current Situation in Global Oil, Gas, and Petroleum Products Markets, Energy Transition Trends, State of the Coal Industry, and Corporate News.

At the beginning of September, the geopolitical situation continues to shape the energy agenda. Sanction pressure on the Russian energy sector is intensifying: the European Union has implemented stricter price restrictions on oil from Russia since September 3, while the United States indicates its readiness to impose secondary measures against Moscow’s partners. Nevertheless, dialogue between Russia and certain countries continues: new energy projects and cooperation (for instance, with China and Asian nations) are being discussed at international forums. Simultaneously, global raw material markets are exhibiting relative stability. Oil prices fluctuate around $70 per barrel, maintaining a fragile balance between supply and demand, while the European gas market, despite record inventories, remains volatile ahead of winter.

Within Russia, authorities are taking decisive steps to normalize the situation in the domestic fuel market. An export ban on gasoline is in effect, and by September 10, decisions are expected regarding adjustments to the pricing mechanism—a key subsidy for oil refiners—to curb rising prices for gasoline and diesel. It is anticipated that the threshold prices used to calculate the pricing mechanism will be retroactively raised from August 1, allowing oil companies to receive additional compensation from the budget. At the regional level, emphasis is placed on energy development: within the framework of the Eastern Economic Forum, a meeting is scheduled to discuss the energy sector in the Far East, where new infrastructure projects will be presented and measures for supporting the industry in the macro-region will be discussed. In general, the Russian fuel and energy complex is adapting to new conditions—from redistributing exports to friendly countries to accelerating the development of domestic resources and technologies.

Oil Market: Prices Stabilize Around $70 Amid Increased Supply and Sluggish Demand

Global oil prices at the beginning of September are relatively stable after a summer decline. The North Sea Brent blend holds steady in the ~$68–70 range per barrel, returning to early summer levels, while American WTI is trading around ~$64–66. Although current prices are approximately 10% lower than a year ago, the recent price recovery indicates a degree of market revitalization. Several fundamental factors currently influence oil price dynamics:

• OPEC+ Production Increase. The OPEC+ oil alliance continues to gradually increase supply. In August, the collective production quota for major participants in the deal rose by about 0.5 million barrels per day; a similar increase is expected in September. However, analysts suggest that at the upcoming meeting of the alliance (scheduled for September 7), countries may pause further production increases due to the emergence of excess supply and rising global oil inventories.
• Record Production in the U.S. The largest oil producer, the United States, has reached an all-time high in production. According to the Energy Information Administration (EIA), U.S. oil production exceeded 13.5 million barrels/day in June, adding significant additional supply to the global market.
• Slow Demand Growth. The rate of growth in global oil consumption remains low. According to the updated forecast from the International Energy Agency (IEA), global demand will increase by only ~0.7 million barrels/day in 2025 (compared to over 2.5 million in 2023). OPEC has also lowered its demand growth estimate to ~1.2 million barrels/day in 2025. Reasons include the slowdown in the global economy, the effects of high prices in previous years (which stimulated energy conservation), and weakening industrial activity in China.
• Geopolitical Uncertainty. The protracted conflict and sanction standoff adds nervousness to the market. The lack of progress in negotiations between Russia and the West means tight restrictions on Russian oil exports will remain, maintaining a certain risk premium in prices. On the other hand, some episodic contacts among leaders have somewhat alleviated panic, resulting in prices fluctuating in a relatively narrow corridor without sharp rallies or crashes.

As a result, supply dominance over demand keeps the global oil market in a state of slight surplus. Despite the price rise at the end of summer, rates remain significantly below peak values from 2022-2023. Several analysts predict that if current trends persist, the average Brent price could drop below $60 per barrel by early 2026. Future dynamics will depend on the actions of OPEC+ and the situation in the global economy. For now, moderate oil prices help constrain inflation in importing countries, though they reduce export earnings for oil-producing states.

Gas Market: Full Storage Does Not Guarantee Price Stability

The gas market's main focus remains on Europe. EU countries rapidly filled underground storage facilities with natural gas throughout the summer in preparation for the fall-winter period. By the end of August, the average filling level of European UGS facilities exceeded 92%—significantly above the target (90% by early November). Such record inventories previously allowed for price control. However, as colder weather approaches, volatility in the gas market is rising again. In the absence of prospects for a swift resolution to the conflict, traders are pricing in risks of possible supply disruptions. An additional factor has been scheduled technical work at Norwegian fields in the North Sea at the end of August, temporarily reducing gas exports from Norway.

Consequently, European gas prices have turned upwards. Futures for the next month at the Dutch hub TTF again surpassed $400 per 1,000 cubic meters (approximately €38 per MWh), reaching a one-month high. Prices increased from ~$380 to ~$410 over the week, halting several weeks of steady decline. Although current levels are far from the peaks of 2022, the market remains extremely sensitive to any risk factors. European countries continue to compensate for the loss of Russian pipeline gas volumes with record imports of liquefied natural gas (LNG), competing for LNG shipments with Asian buyers at high prices. Experts anticipate that uncertainty surrounding future supplies and weather conditions will maintain high volatility in the gas market this upcoming fall and winter.

International Politics: Sanctions Tighten, No Compromise in Sight

The weeks following the unsuccessful Russian-American summit in Alaska have not brought progress in resolving the geopolitical crisis—the diplomatic dialogue is effectively frozen. On the contrary, signs of further escalation in the sanctions regime are emerging. The United States has taken an unprecedented step: President Donald Trump ordered on August 27 to raise customs duties on a number of goods from India by 25 percentage points (to 50%) as a response to the ongoing import of Russian oil. This sharp move signaled Washington's readiness to impose secondary sanctions against major consumers of Russian energy resources. India expressed regret and officially protested against the tariff increases, stating that its purchases of Russian oil are dictated by national economic interests and cannot be quickly reduced.

U.S. European allies, on the other hand, are acting more cautiously. The new, 18th sanctions package from the European Union lacks radical measures against Russian energy exports—several EU states block the harshest proposals, fearing a hit to their own energy security. Instead, Europe has agreed to selectively strengthen previously imposed restrictions. In particular, as of September 3, a reduction in the price ceiling for Russian oil has come into effect, decreasing from $60 to $47.6 per barrel, intended to reduce Moscow's oil revenues without imposing a direct embargo. Overall, the sanction standoff in the energy sector remains tense: the United States continues to apply pressure on major buyers of Russian oil and gas, while Europe seeks to avoid extreme measures, considering the reliance of several economies on critically important supplies. Washington has also hinted at the potential for extending trade restrictions to other key importers of Russian energy resources if Moscow does not make concessions, supporting a high level of uncertainty.

Asia: India Defends its Interests, China Increases Imports, Indonesia Seeks Cooperation

• India: Despite unprecedented external pressure, New Delhi has no intention of abandoning profitable Russian energy sources. Indian leadership openly protests against U.S. sanctions measures—in response to the increased tariffs, the Indian side stated that imports of oil from Russia are driven by economic interests and cannot be reduced quickly. Indian refineries continue to purchase Russian Urals oil at a significant discount (about $5 below Brent prices), maintaining high supply volumes. Moreover, imports of Russian petroleum products (gasoline, diesel) remain substantial, fully satisfying domestic demand. Concurrently, the government is seeking to reduce long-term dependence on external sources: the state company ONGC has begun drilling very deep wells on the Andaman Sea shelf to discover new oil and gas reserves. This program aims to strengthen India's energy independence in the long term.
• China: The largest economy in Asia is also actively capitalizing on the situation. Beijing has not joined the sanctions against Moscow and has significantly increased imports of Russian energy resources at reduced prices. According to Chinese customs data, in 2024, China imported about 213 million tons of oil and 246 billion cubic meters of natural gas from Russia—1.8% and 6.2% more than the previous year, respectively. In 2025, shipments from Russia continue to grow (though the pace has slowed amid overall economic stagnation). Concurrently, China is increasing its own oil and gas production, aiming to reduce dependence on external sources. Despite record investments in renewable energy, the country continues to rely on traditional hydrocarbons to meet baseline demand. On September 2, Gazprom and the Chinese corporation CNPC signed a legally binding memorandum for the construction of the “Power of Siberia 2” gas pipeline through Mongolia. The implementation of this large-scale project in the coming years will significantly enhance Russian gas supplies to China, further intertwining the energy systems of the two countries.
• Indonesia: Moscow is expanding energy cooperation in Southeast Asia. Negotiations are ongoing regarding the participation of Russian companies in the development of oil and gas fields on the Indonesian shelf, as well as shipments of Russian oil and liquefied natural gas to this country. As noted by Russian Foreign Minister Sergey Lavrov, such projects could open new markets for the Russian energy sector, strengthening Russia's presence in the rapidly growing Asian region. Concurrently, an agreement on a free trade zone between Indonesia and the EAEU is under discussion, which will facilitate energy cooperation and mutual investments.

Energy Transition: Records in "Green" Energy and the Role of Traditional Resources

The global transition to low-carbon energy continues to gain momentum. Many countries are recording record levels of electricity generation from renewable sources (RES). In the first half of 2025, approximately 380 GW of new solar capacity was installed worldwide—64% more than the previous year, reflecting an unprecedented growth in investments in “green” energy. In the U.S., the share of renewable generation surpassed 30% last summer, while in the EU, it is expected to exceed 35% by the end of the year. Nonetheless, for grid reliability, traditional energy resources remain in high demand: hydrocarbons and nuclear energy cover the baseload when the sun and wind are unavailable. Many states are investing in energy storage technologies and grid modernization, but at this stage, a balance between “green” generation and conventional fuels remains necessary for stable energy supply.

Coal: High Demand Persists Despite Climate Agenda

Despite efforts toward decarbonization, coal maintains a significant position in the global energy balance. According to the IEA, in 2024, global coal consumption reached a record ~8.8 billion tons and is expected to remain at this plateau in 2025. The primary growth in demand is occurring in Asia: China and India continue to ramp up coal production and usage to meet their energy needs. In Europe and the U.S., coal generation is gradually declining, but globally this is more than compensated by Asian growth. Coal prices in 2025 remain relatively high by historical standards, supported by demand amid expensive gas. However, analysts are observing early signs of a trend reversal: as RES development accelerates and carbon constraints are introduced, coal demand may peak and begin to decline by the end of the decade.

Russian Oil Products Market: Government Measures Curb Prices, Stabilization Expected

In Russia’s domestic fuel market, August saw a tense situation caused by rising prices and local gasoline shortages. The government responded with a set of measures: a ban has been implemented on the export of automotive fuel, sales norms for petroleum products through exchanges have been raised, and oil companies have received increased compensation through the pricing mechanism. In August, budget payments to refineries (RF) under the fuel pricing mechanism reached 75.5 billion rubles (+8% compared to July)—the highest figure since March 2025, although still 2.2 times lower than in August 2024. The growth in subsidies is attributed to increased fuel supplies to the domestic market and rising export prices for diesel fuel at the end of summer. From January to August, the total volume of payments through the pricing mechanism amounted to 681 billion rubles, nearly half of that for the same period last year—due to the strengthening ruble and declining export quotes.

It is expected that the government measures will cool the domestic fuel market in the coming weeks. By early September, exchange prices for gasoline have stopped reaching new highs. Authorities estimate that the situation will gradually stabilize, and by autumn there will even be a surplus of gasoline and diesel fuel in the market. This will allow for stockpiling and prevent new price spikes for consumers.

Energy Supply to New Regions: Fuel Support and Local Solutions

Efforts to integrate new regions into the unified energy system of Russia are ongoing. At the end of August, the construction of a gas pipeline from Crimea to the Kherson region was completed, which will provide several settlements in the south with natural gas. Additionally, the government has introduced transportation subsidies for coal in the Donbass and Azov regions to stabilize fuel supply for power plants and households. Concurrently, alternative autonomous energy sources for remote areas are being considered. Experts note that combined solutions—such as using diesel generators along with solar panels and energy storage systems—can enhance energy supply reliability without the prolonged wait for grid infrastructure expansion. Such pilot projects are already under discussion at the regional level as part of the strategy to ensure energy security in the new territories.

The Far East: Focus on Energy Development Projects

In the Far East, the fuel and energy complex is becoming one of the central avenues for development. The Eastern Economic Forum (EEF-2025) has commenced in Vladivostok, where on September 4, President Vladimir Putin will hold a meeting on the development of the energy sector in the macro-region. The agenda includes the accelerated development of local resources, infrastructure modernization, and ensuring energy supply to remote areas. In a video conference format, the state leader will be presented with new projects: extraction initiatives, processing facilities, and territories designated for accelerated development. Significant initiatives are already being implemented: for instance, in Kamchatka, construction is underway for coastal infrastructure for LNG reception and regasification to supply the region with gas; power grids are being expanded to connect new industries. The support measures for the Far Eastern energy sector, discussed at the EEF, are expected to enhance energy supply to the regions and create a foundation for increasing energy resource exports to Asia-Pacific markets.

Corporate News: Dividends, LNG Exports, and Strategic Initiatives

• Gazprom Neft – Dividends. The Board of Directors of Gazprom Neft has recommended a dividend payment of 17.3 rubles per share for the first half of 2025. This is significantly lower than for the same period last year (approximately 52 rubles), due to a reduction in the company’s profit amid tax burdens and weak market conditions. Nonetheless, Gazprom Neft maintains a high payout ratio to shareholders and continues to adhere to its dividend policy.
• Novatek – Shipments via the Northern Sea Route. At the beginning of September, Novatek dispatched its first shipment of liquefied natural gas via the Northern Sea Route this year. The start of Arctic navigation allows the company to accelerate the delivery of Russian LNG to Asia while bypassing the Suez Canal and optimizing logistics for the “Yamal LNG” and “Arctic LNG” projects. Utilizing the shortest route significantly reduces the time and cost of transporting gas to Asian consumers.
• Lukoil – Share Buyback. Lukoil continues its share buyback program, which was initiated earlier in 2025. The total buyback amount has reached approximately 650 billion rubles, and a substantial portion of these shares will be annulled, increasing the share of profits attributable to each remaining share in circulation. Despite a decline in financial metrics compared to the previous year, Lukoil is maintaining its capitalization and demonstrating commitment to shareholder interests while also implementing strategic business development projects.

Despite external pressures, the largest companies in the Russian energy sector maintain resilience and continue to develop. Dividend payments, share buybacks, and the exploration of new export routes demonstrate the industry's commitment to sustaining investment attractiveness even in a challenging environment. Russian oil and gas giants are adapting to new realities and intend to continue following their long-term strategies, ensuring energy resources for both the domestic market and foreign partners.