Japan buys Russian oil; Russians buy Japanese cars

It all started with a denial. The planned visit by a Japanese government delegation to Moscow on May 26 and 27 May, according to official Tokyo, in no way meant that Japan intended to expand its economic relations with Russia or even restore them to the level they were at before February 24, 2022.

Instead, the Japanese Ministry of Economy, Trade and Industry emphasizes that the main goal of the government trip is to protect the assets of Japanese companies in Russia. However, both the high-profile composition of the business delegation accompanying the government representatives from Tokyo to Moscow and the development of trade between the two countries in recent months suggest that Japan and Russia are on the verge of a cautious revival of their economic relations.

Representatives of major Japanese corporations operating in Russia are expected to participate in the talks in the Russian capital, including Mitsubishi Corporation—one of Japan’s largest companies with 72,000 employees worldwide—Mitsui & Co., which is active in the energy, metals, and chemical sectors, and Mitsui O.S.K. Lines, one of the world’s largest shipping companies.

Evidently, the energy crisis triggered by the U.S.-Israeli military strike against Iran and the blockade of the Strait of Hormuz is prompting Japan to resume imports of Russian crude oil. Thus, on May 5, a tanker once again brought Russian oil from the Sakhalin-2 refinery to the southern Japanese port city of Imabari.

The visit to Moscow in early May by Muneo Suzuki, a member of the House of Councillors of the Japanese Parliament, should also be viewed in this context. Suzuki met with Russian Deputy Foreign Minister Andrei Rudenko. The Japanese parliamentarian had served as an advisor to the late Prime Minister Shinzo Abe, whose widow was received by President Putin in Moscow in May 2025. Prime Minister Abe was committed to fostering strong economic ties between the two countries and visited Russia frequently. Representative Suzuki stated: “I would like to restore Russian-Japanese relations to the level they were at under Abe.”

Oil and Gas at the Heart of Economic Relations

In Japanese-Russian trade, energy exports from Russia to Japan have so far formed the backbone of the relationship. Japan’s economy has a particular interest in remaining involved in the two oil and gas production projects, Sakhalin-1 and Sakhalin-2, which are geographically close to Japan. In Sakhalin-1, the Japanese consortium SODECO holds a 30% stake; in Sakhalin-2, Mitsui and Mitsubishi hold a combined 22.5% stake. Despite the Ukraine crisis, Japanese companies, with the backing of the government in Tokyo, have not abandoned either project, even though the British company Shell withdrew from them. This is because the Japanese government has classified Sakhalin-1 and Sakhalin-2 as “projects of exceptional importance,” as they contribute to the country’s national energy security.

About 10% of Japan’s gas imports still come from Russia. At the same time, Japan is focusing on diversifying its energy imports. Japanese companies have signed new contracts with U.S. firms for liquefied natural gas imports totaling 7.5 million tons per year. As a result, Japan now sources 10% of its LNG imports from the United States—the same amount as from Russia. Following the disaster at the Fukushima nuclear power plant in March 2011, the island nation has become heavily reliant on LNG.

Automotive Industry as a Growth Driver

Until 2022, automobile exports from Japan to Russia played a major role in the economic relations between the two countries. Japanese cars are regarded in Russia as high-quality and reliable. The sale of Japanese automobiles in Russia, especially in its Asian part, was a growth factor in economic exchange between the two countries for decades.

The market leaders in this sector were Mitsubishi, Toyota, and Nissan. Their vehicles dominated the roads, particularly in the Russian Far East between Vladivostok and Khabarovsk. In 2011 alone, passenger cars accounted for 63% of Japanese exports to Russia. After Russia joined the World Trade Organization in 2012, Russian import tariffs on Japanese cars were gradually reduced from 30% to 15%. This strengthened the position of Japanese exporters.

However, after February 24, 2022, business collapsed completely due to sanctions against Russia. Toyota, Nissan, and other Japanese manufacturers halted production in Russia. The share of Japanese brands in imports had already fallen from 17.9% to 6.6% in 2022 compared to the previous year. Japanese companies had to take billions in write-downs. Toyota alone posted a loss of $2.6 billion from the sale of its plant in St. Petersburg.

Chinese manufacturers such as Chery, Great Wall (Haval), and Geely stepped into the void left by Japanese, Korean, German, and European automakers, and have since captured more than 60% of the Russian market. It is considered highly unlikely that the Japanese will return to automobile production on Russian soil. In contrast, however, more Japanese cars are being shipped to Russia.

Trade between Russia and Japan grew by 25% between February 2025 and February of this year, primarily due to imports of Japanese passenger cars into Russia. In January 2026 alone, shipments of passenger cars from Japan to Russia rose by 45%. Cars and car parts accounted for about 60% of all Japanese exports to Russia in the first two months of 2026.

Medical devices and pharmaceuticals, synthetic fertilizers, and processed rubber also contributed to the rise in imports from Japan. Traditionally, tobacco and pharmaceutical products, along with essential oils and personal care products, are the three largest Japanese export goods to Russia, alongside cars. Japanese imports from Russia, on the other hand, consist primarily of fish and crustaceans, mineral fuels, and wood and wood products, mainly from the forests of Eastern Siberia.

Historically Rooted Special Economic Relations

Despite geopolitical rivalry, there have been repeated attempts by both sides to find compromises based on economic interests in relations between Japan and Russia since the 19th century. For example, in 1867, Japan and Russia agreed to the joint use of Sakhalin. And after the Russo-Japanese War of 1904–05, which Russia lost, the Russian Empire and the Japanese Empire were allies.

Following the October Revolution of 1917, Japanese forces participated in the military intervention by Western nations, including the United States, against the new Soviet state. Yet soon after the end of the Russian Civil War, in 1925, the two states signed a treaty on cooperation, primarily in the economic sphere. The Soviet Union, which needed foreign currency for the development of its Far Eastern regions, granted concessions to the Japanese for fishing, logging, and the extraction of coal and gold. This economic cooperation continued even during World War II until 1944.

For although Japan was allied with Hitler’s Germany, the Japanese Empire signed a neutrality pact with the Soviet Union in April 1941. Richard Sorge, a German journalist and agent of Soviet military intelligence based in Tokyo, reported to a skeptical Soviet leadership in 1941, based on his government contacts, that Japan would remain neutral and would not attack the Soviet Union.

It was only after the German Reich’s surrender in May 1945 that Soviet forces attacked Japan in accordance with agreements with the Western Allies. The Soviet Union annexed the southern Kuril Islands, which had belonged to Japan until 1945 and which the Japanese government still claims today. Yet despite this territorial dispute, the two countries signed a trade agreement as early as 1957. The economic interests of both sides outweighed their political differences. By 1979, trade between the Soviet Union and Japan had reached $4.1 billion.

Russia built on these trade relations starting in 1992, when Japan recognized the Russian Federation as the legal successor to the Soviet Union. Japanese exports grew from $1.1 billion in 1992 to $3.1 billion in 2004 and to $16.8 billion in 2008. This peak was never reached again.

Driven by the rapid rise in oil and gas prices, bilateral trade experienced a strong upswing in the 2000s. Japan increasingly sourced crude oil and liquefied natural gas from the Russian Far East projects Sakhalin-1 and Sakhalin-2, while Russia became an important market for Japanese automobiles and machinery.

Following the 2014 conflict over Crimea, Japanese imports from Russia fell from $9.2 billion in 2014 to $5.1 billion in 2015. Although this was followed by an increase to $7.9 billion in 2021, Japanese imports to the Russian Federation fell to $2.8 billion in 2023 due to the consequences of the Ukraine conflict.

Japanese imports from Russia rose from $2.4 billion in 1992 to $13.4 billion in 2008. These imports peaked in 2013 and 2014 at $20 billion. As recently as 2022, Russian imports to Japan were valued at $14.9 billion. After that, Russia’s exports to the island nation plummeted by about half, reaching $7.4 billion in 2023. By 2025, they had fallen to $5.3 billion. Already in the first weeks following the start of the military conflict in Ukraine, Japan joined the G7 group of nations in imposing sanctions against Russia.

By December 2025, Japan had adopted a total of 26 sanction packages against Russia. However, since the start of a dialogue and negotiation process regarding the Ukraine conflict initiated by U.S. President Donald Trump, interest among Japanese businesses in trade relations with its Russian neighbor has been growing again. This interest is being fueled by skyrocketing energy prices due to the war in the Middle East and the blockade of the Strait of Hormuz. Japan covers approximately 80% of its oil needs through imports via the strait.

The upcoming visit by a Japanese government and business delegation also confirms the ironclad rule that, in Japanese-Russian relations, pragmatic interest in economic benefits ultimately proves to be the dominant factor. This article was prepared for the German-Russian Chamber of Foreign Trade.