Energy Sector News – Wednesday, September 3, 2025: Sanctions, Russia-China, and Energy Stability

Detailed Overview of Energy Sector Developments as of September 3, 2025: Sanctions Pressure from the US and EU, Russia-China Pipeline Agreements, Oil and Gas Market Situations, Energy Policy, and Corporate News

Current developments in the fuel and energy complex (FEC) as of September 3, 2025, draw the attention of investors and market participants due to diverging trends. More than two weeks after the unsuccessful summit between the Presidents of Russia and the US in Alaska, geopolitical tensions remain high. Washington is intensifying pressure on buyers of Russian energy resources, highlighted by a significant increase since August 27 in customs duties on a range of Indian goods to 50% as a punishment for India's purchases of Russian oil. Simultaneously, the US is urging European allies to tighten energy sanctions against Moscow; however, the forthcoming EU sanctions package is moving slowly as several countries in the bloc are reluctant to implement the harshest measures, fearing damage to their own energy security.

Nevertheless, global energy markets maintain relative stability. Oil prices have recovered to around $70 per barrel after a summer decline, signaling a fragile balance between supply and demand. The European gas market remains tense: despite record-high gas volumes in storage, the impending winter is triggering a new spike in prices and volatility. At the same time, the energy transition is gaining momentum, with many countries recording record electricity generation from renewable sources, although traditional fuels are still utilized for the reliability of energy systems. In Russia, authorities have extended the ban on gasoline exports to address the arising fuel shortage; these measures are expected to stabilize the internal oil products market in the coming weeks. Meanwhile, Moscow and Beijing are deepening their energy cooperation with a new agreement to build the major pipeline "Power of Siberia – 2" to China. Below is a detailed overview of key news and trends in the oil, gas, coal, energy, and commodity sectors as of this date.

Oil Market: Prices Stabilizing Around $70 Amid Growing Supply and Weak Demand

Global oil prices as of early September are relatively stable following a period of decline. The North Sea Brent blend has settled within the range of approximately $68–70 per barrel, returning to summer levels, while American WTI is trading around $64–66. Although current prices are about 10% lower than a year ago, the recent uptick signals a certain market revival. Various fundamental factors are now influencing oil price dynamics:

• OPEC+ Production Increases. The oil alliance OPEC+ continues to gradually increase supply. In August, the aggregate production quota for the main participants in the deal was raised by approximately 0.5 million barrels per day; a comparable increase is expected in September. However, analysts suggest that at the upcoming OPEC+ meeting (scheduled for September 7), countries may pause further production increases, considering the emerging supply surplus and rising global oil inventories.
• Record US Production. The United States, the largest oil producer, has reached historically high production levels. According to the Energy Information Administration (EIA), US oil production exceeded 13.5 million barrels per day in June, adding significant additional supply to the global market.
• Moderate Demand Growth. The pace of global oil consumption growth remains low. According to the updated forecast from the International Energy Agency (IEA), global demand is expected to increase by only approximately 0.7 million barrels per day in 2025 (for comparison, growth surpassed 2.5 million barrels in 2023). OPEC has also reduced its demand growth estimate to around 1.2 million barrels per day in 2025, attributed to slowing global economic growth, the effects of high prices in previous years (which encouraged energy conservation), and decreasing industrial activity in China.
• Geopolitical Uncertainty. The prolonged conflict and sanctions confrontation add market nervousness. The lack of progress in negotiations between Russia and the West implies continued strict restrictions on Russian oil exports, maintaining a certain risk premium in prices. Conversely, episodic contacts between leaders marginally reduce panic levels, resulting in prices fluctuating within a relatively narrow corridor without sharp rallies or collapses.

Collectively, the dominance of supply over demand keeps the global oil market in a state of slight surplus. Despite the recent price hike, quotations remain significantly below the peak values of 2022–2023. A number of analysts predict that, if current trends persist, the average price of Brent could drop below $60 per barrel by early 2026. Further dynamics will depend on OPEC+ actions and the overall situation in the global economy. For now, moderate oil prices help curb inflation in importing countries, although they also reduce export revenues for oil-producing nations.

Gas Market: Full Storage Does Not Guarantee Price Stability

The gas market's primary focus remains on Europe. EU countries have rapidly filled underground gas storage throughout the summer in preparation for the autumn-winter period. By the end of August, the average level of filling European UGS facilities surpassed 92%, significantly above the target benchmark (90% by early November). Such record reserves previously helped keep prices under control. However, with colder weather approaching, 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. Additionally, planned technical work at Norwegian fields in late August temporarily reduced gas exports from Norway.

As a result, European gas prices have turned upward. Futures for the upcoming month at the Dutch TTF hub have once again exceeded $400 per 1,000 cubic meters (approximately €38 per MWh), reaching their highest level in the last month. In just one week, prices rose from around $380 to approximately $410, breaking a streak of several weeks of gradual decline. Although current levels are far from the record peaks of 2022, the market remains highly sensitive to any risk factors. European countries continue to compensate for lost volumes of Russian pipeline gas with record imports of liquefied natural gas (LNG), competing with Asian buyers for LNG shipments at elevated prices. Notably, the pace of storage replenishment this summer has been slower than last year due to the proximity of storage facilities to maximum capacity, limiting further possibilities for smoothing price fluctuations. Experts anticipate that uncertainty about future supplies and weather conditions will keep the gas market highly volatile this upcoming fall and winter.

International Politics: Dialogue Has Reached a Standstill, Sanction Confrontation Intensifies

The weeks following the unsuccessful Russia-US summit have not yielded progress in addressing the geopolitical crisis—diplomatic dialogue has effectively reached a standstill. Instead, signs of further escalation of the sanctions regime have emerged. The United States has taken unprecedented steps: President Donald Trump ordered a 25 percentage point increase (to 50%) in customs duties on a range of goods from India starting August 27 as punishment for continued imports of Russian oil. This sharp move signaled Washington's readiness to impose secondary sanctions on major consumers of Russian energy resources. India expressed regret and officially protested the increased tariffs, stating that purchases of Russian oil are driven by its national economic interests and cannot be reduced rapidly.

In contrast, US European allies are acting more cautiously. The new sanctions package under discussion in the EU lacks additional restrictions on imports of Russian energy resources—several EU states are effectively blocking the harshest measures, fearing negative impacts on their own energy security. Instead, Europe has agreed to only a limited enhancement of previously imposed measures. Specifically, starting September 3, the price cap on Russian oil has been lowered from $60 to $47.6 per barrel, aimed at reducing Moscow's oil revenues without implementing an outright embargo. Overall, the sanctions confrontation in the energy sector remains tense: the US is increasing pressure on major buyers of Russian oil and gas, while Europe is avoiding extreme measures, considering specific economies' dependencies on critical supplies. Washington also hints at the possibility of extending trade restrictions to other key importers of Russian energy resources if Moscow does not make concessions.

Asia: India Defends Its Interests, China Increases Imports and Production

• India: Despite unprecedented external pressure, New Delhi has no intention of abandoning lucrative Russian energy resources. Indian leadership openly states that a sharp reduction in oil and fuel imports from Russia is unacceptable for the country's economy. Indian refineries continue to purchase Russian Urals oil at a significant discount (around $5 below Brent prices), facilitating increased supply volumes. Moreover, imports of Russian oil products (diesel, gasoline) remain high, fully satisfying domestic demand. Concurrently, the government is taking steps to reduce long-term dependence on hydrocarbon imports. Prime Minister Narendra Modi announced the launch of a large-scale program for the development of offshore oil and gas fields on August 15, during the Independence Day address. The state company ONGC has already begun drilling deep-sea wells in the Andaman Sea, with initial results deemed promising. The program aims to uncover new hydrocarbon reserves and enhance India's energy independence. Additionally, at the Foreign Ministers' meeting in Moscow on August 21, India and Russia agreed to deepen trade and economic cooperation, clearly indicating that New Delhi intends to maintain energy ties with Moscow despite external pressure.
• China: The largest economy in Asia is also actively leveraging the situation to strengthen its energy security. Beijing has not joined sanctions against Moscow and significantly increased imports of Russian energy resources at reduced prices. According to Chinese customs statistics, in 2024, China imported approximately 213 million tons of oil and 246 billion cubic meters of natural gas from Russia—representing increases of 1.8% and 6.2% compared to the previous year. In 2025, supplies from Russia continue to grow (although their rate has somewhat slowed amid overall economic stagnation). It is reported that in August, shipments of Urals oil to China reached around 75,000 barrels per day, partially compensating for the reduction in imports from Indian buyers under US pressure. 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 still relies on traditional hydrocarbons to meet base demand. The Chinese government has allocated significant funds for geological exploration and the development of hard-to-reach fields, advancing new extraction projects. Moreover, on September 2, at negotiations in Beijing, Gazprom and CNPC signed a legally binding memorandum for the construction of the "Power of Siberia – 2" pipeline through Mongolia. The implementation of this massive project will significantly boost gas exports from Russia to China in the coming years to 50 billion cubic meters annually, further solidifying Moscow and Beijing's energy alliance. Thus, the two largest consumers in Asia—India and China—continue to play a key role in global commodity markets, combining increased imports with the development of their resource bases.

Energy Transition: Records in Renewable Energy and the Role of Traditional Resources

The global transition to low-carbon energy remains on track. Several countries are recording electricity generation records from renewable sources. By the end of 2024, in the European Union, total generation from solar and wind power plants has for the first time exceeded generation from coal and gas-fired power plants, and this trend continues in 2025. The commissioning of new capacities is increasing the share of “green” energy in the energy balance, while the use of coal is gradually decreasing (following a temporary uptick during the 2022–2023 energy crisis). In the US, renewable energy is also breaking records—in the first half of 2025, over 30% of all electricity was generated from renewables, with combined generation from solar and wind plants surpassing generation from coal-fired plants for the first time. China, as the global leader in installed renewable capacity, adds tens of gigawatts of new solar panels and wind turbines each year, regularly setting new records in “green” generation.

Massive investments are accelerating the energy transition. According to IEA estimates, total global investments in energy are expected to exceed $3.3 trillion in 2025, with more than half of this amount earmarked for renewable projects, electricity grid modernization, and energy storage systems. In the US, around 33 GW of new solar power plants are planned to be commissioned within the year—a record figure accounting for nearly half of all new capacities. Nevertheless, energy systems continue to rely on conventional power plants to maintain network stability. The increased share of solar and wind energy presents new challenges for balancing: during periods of low solar and wind generation, backup capacities or accumulated energy resources come into play. Therefore, despite unprecedented growth in renewables, traditional resources continue to play a crucial role in ensuring reliable energy supply.

Coal: High Global Demand Despite Climate Agenda

Despite efforts to decarbonize the economy, coal maintains a significant position in the global energy balance. In 2025, global demand for coal remains close to record levels. The main driver is Asia, primarily China and India, where coal-fired power plants and industries (metallurgy, cement) support economic growth. For these countries, coal remains the most affordable and reliable energy source capable of covering the base load of their energy systems. Industry analysts estimate that total new coal power capacity additions worldwide could reach around 80 GW by the end of 2025, making the current year one of the most successful for the sector in the last decade. While many developed economies are accelerating their exit from coal (after a brief rise in its use during the 2022 crisis), sustained demand from developing countries supports the global coal market. This situation highlights the gap between climate goals and real needs: the share of coal in energy is not decreasing rapidly enough, remaining significant for reliability and energy supply accessibility.

Russian Oil Products Market: Government Measures Cooling Prices, Fuel Surplus Expected

In Russia's internal fuel sector, a large-scale campaign has been launched to normalize the pricing situation. In the first half of August, wholesale market prices for gasoline and diesel fuel surged to record levels, causing serious concern for the government. The primary reasons for this spike are seasonal demand increases (planting and harvesting campaigns), scheduled maintenance of major refineries, depreciation of the ruble, and high export profitability of oil products in light of rising global prices. In certain remote regions, a local fuel shortage has developed, exacerbating pressure on retail prices and causing disruptions at gas stations.

Authorities have quickly reacted to prevent a crisis from unfolding. Starting August 15, a temporary ban on the export of automotive gasoline has been imposed (initially until the end of the month) to saturate the internal market. At the end of August, the government extended this ban: from September 1 to 30, it covers all exporters (including oil companies), and for traders and intermediaries, it will remain until October 31. Simultaneously, relevant authorities adjusted the "damping" mechanism—a system of compensations for oil producers amid high export prices. The formula for calculating the damping was recalculated retroactively from August 1, 2025, significantly increasing payments to oil refiners. These measures aim to make gasoline and diesel supplies to the domestic market more profitable for companies compared to exports. According to official statements, the steps taken have already helped slow price growth and ensure adequate fuel supply within the country.

Nonetheless, industry experts warn that administrative measures provide only a temporary effect. Direct export bans and manual price regulation can only suppress the price surge for a short term. For sustainable stabilization, market tools are needed: a more flexible damping mechanism, targeted fuel delivery subsidies to remote areas, and improvements in tax policy. Preliminary forecasts suggest that with such measures, the rate of gasoline price growth could be reduced to below overall inflation by the end of the year. However, oil companies face a challenging period: strict monetary policy (to curb inflation) and ongoing export restrictions will constrain their profitability.

Nevertheless, the situation is gradually stabilizing. The government expects that by September, gasoline production volumes will exceed domestic consumption, eliminating shortages and cooling prices. Oil product inventories at storage facilities have reached record levels (over 5 million tons of gasoline and diesel combined), fully covering the needs of the domestic market. Oversight of the fuel sector remains at the highest level, with relevant authorities preparing new proposals to prevent a repeat of similar crises in the future. As a result, the Russian fuel market is gradually returning to equilibrium after the upheavals of early August.

Energy Supply in New Regions: Crimean Gas Pipeline and Autonomous Solutions

In late August, steps were taken to improve energy supply in Russia's new regions. Specifically, a new gas pipeline from Crimea to the Kherson region has been constructed, enabling gas supply to the southern areas of the region. As reported by Kherson region governor Vladimir Saldo in a meeting with the President of Russia, approximately 1.7 billion rubles have already been spent on the project, and they are now working on connecting households to gas. A full-scale gas transportation network for the new territories is still to be established, but temporary solutions are already being implemented to meet energy needs.

Thus, in addition to building trunk pipelines, local generation and mobile LNG solutions should be actively utilized for operational energy supply to the new territories.

Corporate News: Dividends, Contracts, and New Projects

The largest companies in the Russian FEC continue to implement their development strategies despite external pressures. At the corporate level, events of significance for investors and shareholders are taking place:

• Novatek. On August 21, the company's board of directors discussed the issue of dividend payments for the first half of 2025. The favorable financial situation (ensured, in part, by high domestic gas demand and successful LNG exports) is creating expectations for generous interim dividends. The market has reacted positively to these expectations, seeing them as a sign of business resilience.
• Gazprom Neft. On August 25, the Gazprom Neft board recommended a dividend of 17.3 rubles per share based on the results for the first half of 2025. At the current stock price, this corresponds to an annual yield of approximately 3.3%. Despite a slight decline in profits this year, the company demonstrates readiness to share income with shareholders, which reinforces investor trust in the sector.
• Rosneft. The oil company reported progress in realizing key extraction projects, despite a nearly 70% drop in net profit in the first half of 2025 (year on year) due to falling oil prices. In Eastern Siberia, Rosneft has ramped up a newly discovered oil field to its design capacity as part of the strategic "Vostok Oil" project. Achieving planned production volumes of oil and associated gas in this asset in the second half of the year will increase the overall output of the company. Also, Rosneft began industrial gas production at a new cluster site in the Suzun field – an important step in developing the Eastern Siberian clusters aimed at compensating for the declining output at older West Siberian fields.
• Gazprom. The gas conglomerate is strengthening its presence in Asian markets. In August, Gazprom signed a new long-term contract for the supply of liquefied natural gas to a major consumer in the Asia-Pacific region. This will enhance the load of the company's Far Eastern LNG plants and partially compensate for the reduction in pipeline gas exports to Europe. Simultaneously, with government support, efforts to find new partners continue: joint oil and gas projects between Russia and India in the Arctic are being discussed during bilateral meetings. If these initiatives are realized, domestic companies will gain access to additional investments and markets, while India will have long-term sources of energy raw materials.

The aggregate of these developments shows that leading players in the Russian fuel and energy complex are not rolling back their development programs despite sanctions and geopolitical uncertainty. Companies are adapting: new fields are being launched, dividends are being paid, and contracts are signed bypassing previous directions. This instills moderate optimism and confirms that the FEC remains a cornerstone of the economy and an attractive area for investment. In the long term, modernization, technological import substitution, and the redirection of export flows to Asia and the Middle East could lay the foundation for a new growth phase in the Russian FEC—once external restrictions are alleviated.