By: Sergey Tereshkin

As of the end of 2025, the condition of the fuel and energy complex is characterized by an oversupply of oil and gas, keeping prices at minimal levels. For instance, Brent crude is trading around $60 per barrel, while in the U.S., retail gasoline prices have fallen below $3 per gallon, reaching levels unseen since 2021. In Europe, gas storage facilities are filled to nearly 90%, which has kept prices for the "blue fuel" moderate even as cold weather arrives. At the same time, the global energy transition is gaining momentum: renewable energy sources (RES) are breaking generation records, and many countries are increasing capacities in wind, solar, and other clean technologies. Here, we present an overview of the key news in the commodity and energy sectors that influence global markets.

Global Oil Market: Oversupply and Stable Prices

The global oil market is entering a new "supply race." Following the autumn meetings, OPEC+ agreed to refrain from increasing production at the beginning of 2026; however, total supplies remain high. Saudi Aramco has been lowering its official selling prices for oil in the Asian market for several months, reflecting the surplus of crude. American shale producers have achieved unprecedented production growth of 25% in 2025, while production in Brazil and Canada has also reached record levels. At the same time, China has increased its crude oil purchasing program for 2026, while demand in most major markets remains subdued due to economic slowdown. Collectively, these factors are restraining price increases: Brent remains in the range of $60–65 per barrel, while WTI is held around $58–62.

• Oil prices remain relatively stable. Brent is trading around $62, WTI is around $58–60. This is 10–15% lower than a year ago. The key restraint is the "oversupply" amid slowing demand.
• OPEC+ has decided to pause the increase in quotas for the first half of 2026. The group continues to maintain total production cuts of about 3.2 million barrels/day (approximately 3% of global demand).
• Saudi Aramco has once again reduced its selling prices for oil to Asian buyers for February, bringing the Arab Light premium to its lowest level in five years—around $0.40 above average Oman/Dubai prices.
• Venezuela continues to face challenges. Due to U.S. sanctions, crude oil exports in December fell about half compared to November. However, PDVSA is expanding the use of tankers for floating storage and deliveries of oil to China as a way to settle debts.
• A new Chevron oil project off the coast of Angola achieved first oil in 2025. The company plans to reach a production level of about 25,000 barrels/day of oil and 50 million cubic feet/day of gas at the South N’Dola field at peak development.

Gas Sector and LNG: Record Supplies and Price Pressure

2025 has been a landmark year for the gas market: new records for LNG (liquefied natural gas) exports have been set. Leading exporters, particularly the U.S. and Canada, significantly increased shipments. In November, the U.S. exported over 10.9 million tons of LNG—marking the third consecutive record month—mainly due to the cold weather along the coast and high loadings at Cheniere and Venture Global facilities. By year's end, global LNG supplies grew by approximately 4%, exceeding 425 million tons (a substantial increase for the first time since 2022), partly due to the commissioning of new terminals in the U.S., Canada, and Qatar. However, competition is rising in the market: by 2030, new export capacities are expected to increase by another 50%, which could lead to a temporary surplus of gas and price reductions. Europe remains the key market: in November, it received around 70% of U.S. LNG. Meanwhile, demand in Asia has slowed—Asian JKM prices are hovering around $11–12 per MMBtu. Due to moderate temperatures and ample natural gas reserves, European TTF prices were around $10 per MMBtu at the end of the year.

• LNG exports have reached record levels. The U.S. has averaged export volumes of ~15 billion cubic feet/day over 2025 (+25% compared to 2024), supplying the bulk of gas to Europe. Canada has begun regular LNG exports for the first time from the new LNG Canada terminal.
• Gas prices are rising moderately. In the U.S., the average Henry Hub price at the end of November was around $4.5/MMBtu (compared to $3.4 in October) due to rising LNG export demand. Europe and Asia remain above $10/MMBtu but below peak levels seen during winter 2022–2023. The oversupply from the U.S. is dampening sharp price spikes.
• New infrastructure projects are underway. The U.S. plans to invest over $50 billion in constructing pipelines by 2030 to meet growing domestic and external demand. Several major Asian LNG projects (Qatar, Australia) are expected to come online, and discussions are ongoing for a gas pipeline expansion from East Africa.
• Regional nuances. In 2026, China received import quotas for oil and gas, increasing by about 8% from the previous year, supporting its demand. Meanwhile, India is reducing its import dependence by actively developing local gas production and seeking compensation from foreign companies for oil supply shortfalls.

Coal Sector: Record Demand and Long-term Decline

Despite the rapid development of "clean" technologies, global coal demand reached record levels in 2025, driven by several factors. According to the IEA, global coal demand rose by approximately 0.5% to 8.85 billion tons—primarily due to a cold winter and increased consumption in power plants. In China, the largest consumer, coal consumption is generally stable, although a decline is anticipated as RES are scaled up. India, for the first time in five years, reduced coal consumption due to heavy rains and a surge in hydropower generation. In the U.S., coal consumption has increased: high gas prices and government measures (mandates for extending coal-fired power operations) have supported demand. However, long-term trends clearly indicate a decline: by 2030, the share of coal in the energy balance is expected to decrease significantly as a result of renewable sources, gas, and nuclear energy.

• Rising consumption. According to the International Energy Agency, global coal demand has reached a new record (8.85 billion tons), with the largest increases observed in the CIS countries and the U.S. (mainly due to high gas prices), despite declines in India and stagnation in China.
• India and China. In 2025, India reduced coal imports and consumption due to record rainfall and successful hydropower projects. In China, despite the scaling up of RES, coal still accounts for over 50% of generation; however, Beijing plans a gradual reduction in the coal share by 2030 as RES and nuclear energy are developed.
• Long-term trend. IEA experts note that under the influence of decarbonization policies and economic factors, coal demand has reached a plateau and will begin to gradually decline in the second half of the decade. Previously stated environmental targets encourage the conversion of power plants to gas and the installation of additional solar and wind facilities.

Power Sector and Renewables: Record Growth of Renewables and New Challenges

In 2025–2026, a historic turning point has emerged: the total electricity generation from RES has surpassed the share of coal in the global energy balance for the first time. The increase in electricity consumption by 2–3% in 2025 was entirely accomplished by the growth in generation from wind and solar capacities (growth of over 30% and 8% respectively), while coal generation decreased. The global share of RES in power generation exceeded 34%, while coal dropped to approximately 33%. Simultaneously, capacities in hydro and nuclear energy are also growing: it is projected that by the end of 2026, total nuclear generation will reach a record high (primarily due to new reactors in China, India, and South Korea). According to IEA reports, by 2030 about 80% of new growth in renewable sources will come from solar energy, necessitating extraordinary investments in grids and storage to smooth the intermittency. Many countries have already announced large-scale projects: for example, Indonesia plans to increase its installed RES capacity by 30% over the next five years, and the EU is expanding funding for power grids and data centers powered by RES.

• New records in RES. According to industry agencies, in just the first half of 2025, solar and wind installations added over 300 TWh to global generation. This is roughly equivalent to the annual electricity consumption of a country like Italy. The shift to RES is mitigating the pace of demand growth but requires grid modernization.
• Investment in the grid and flexibility. The growth of RES poses balancing challenges for the energy sector: energy storage (batteries, hydrogen), dense networks, and controllable generators are necessary. International institutions are urging governments to accelerate the construction of "smart grids" and substations, as well as to implement demand management systems.
• Hydro and nuclear. Although RES lead, hydropower remains an essential backup—especially in Asia. Nuclear generation is also strengthening: in 2025–26, new reactors will be commissioned in China, India, and the UAE, contributing to reducing dependencies on coal in the region.

International Geopolitics: Conflicts and Sanctions

Global political events remain a significant driver for energy prices. The escalation of the conflict in Yemen (involving the UAE and Saudi Arabia) has added uncertainty: threats of a blockade of the Red Sea and interruptions in oil supplies have increased risk premiums. Concurrently, negotiations to end the war in Ukraine have made little progress, and the Russian leadership's reassessment of positions in December has fueled concerns about future gas flows. Against this backdrop, oil prices are being sustained above August levels despite the "oversaturation" of the market. Sanctions also play an essential role: the U.S. has continued the blockade on Venezuelan oil supplies, cutting PDVSA’s exports by roughly half in December. Nevertheless, some tankers under sanctions are heading towards Venezuela, as Maduro settles debts with China in oil. Additionally, Russia has extended its ban on gasoline and diesel exports until February 2026 due to energy deficit risks.

• The conflict in Yemen. After tense clashes in December, the UAE announced a troop withdrawal, but the situation remains strained. The military crisis adds fears to oil markets, as it potentially threatens major supply routes through the Red Sea.
• Russia-Ukraine. Negotiations to end the war have stalled: Russia is declaring a "revision" of its approach, while the Ukrainian leadership is refusing concessions. This maintains risks for gas supplies (via Gazprom) and oil (considering potential changes in sanctions).
• The blockade of Venezuela. The U.S. has intensified pressure on Venezuelan oil exports: a blockade on tankers has been implemented. PDVSA's export fell about 50% in December. However, some oil continues to be directed to China through barter schemes. Maduro is negotiating with consumer countries, offering significant discounts to avoid a complete halt in sales.
• The Middle East and Iran. Tensions surrounding Iran's nuclear program remain a factor of volatility. Informal signals about the resumption of Iranian gas and oil exports could impact supply balances in the region by mid-2026.

Refining and Oil Products: Margins and New Trends

The growing global surplus of crude oil does not automatically translate into lower prices for fuel products. Diesel market tightness remains high due to structural supply constraints: European refineries are reducing processing of Russian oil under the pressure of sanctions, while drone strikes on Russian oil fields are exacerbating the diesel deficit. As a result, the margin for diesel fuel on the European market has increased by approximately 30% in 2025, despite falling crude costs. In the U.S., gasoline prices traditionally decrease during the Christmas period: at the beginning of December, retail prices fell to 2021 levels (around $2.9/gallon). In Asia, major fuel importers are confirming moderate consumption growth. In response, European refiners are pivoting to the production of biofuels and sustainable aviation fuels (SAF) to diversify their business. Several countries are also discussing the introduction of new environmental fuel component standards, stimulating refinery modernization.

• Rising diesel margins. Due to reduced exports from Russia and limited replenishment of stocks in Europe, diesel prices exceeded crude oil equivalents in November–December. Demand for diesel is expected to remain high in 2026 (construction, agriculture), supporting margins at an average of $10–15/barrel.
• Euro depreciation. As fuel prices decrease in Asian markets, European traders anticipate a decline in gasoline and aviation kerosene prices. According to agencies, in December, Amsterdam gasoline futures dropped 15% from November levels, providing a short-term respite for consumers.
• Transition to SAF and biofuels. Under pressure from the EU and the U.S., refiners are starting to build facilities for biodiesel and SAF production. Subsidization programs for the aviation industry are driving demand: for instance, in Europe, total SAF production is planned to reach 3 million tons by 2026.
• Stabilization in the domestic fuel market. A number of countries have implemented emergency measures. In Russia, where there has been a sharp increase in gasoline prices in the first half of the year, the export ban on fuel has been extended. In contrast, in the U.S., drilling activity has increased—companies are boosting the number of wells to take advantage of the low crude prices.

Major Projects and Investments: Deals and Future Ambitions

Despite short-term challenges, oil and gas companies are preparing for long-term growth. In 2025, several landmark agreements were reached. Woodside Energy signed a long-term contract for the supply of approximately 5.8 billion cubic meters of LNG from new American projects (Louisiana) starting in 2030. International oil companies continue to implement large-scale developments: for example, Saudi Aramco and the UAE plan to increase investments in conventional oil production from 2026 to 2030 after a pause. On the Asian front, Shell and partners in Canada are facing challenges with the launch of the LNG Canada plant: both trains were idle for several weeks in December due to technical failures. The Sakhalin-1 field in Russia remains in focus; the government extended the sale deadline for ExxonMobil's 30% stake until the end of 2026, providing an opportunity for foreign company integration after sanctions are lifted.

• Major LNG deals. In the U.S., several 10–15 year contracts for LNG supplies to Asia and Europe have been announced. In addition to Woodside, such deals have been joined by Kazakhstan's Tengiz (expansion project) and Russian projects (Lachta LNG, Arctic LNG).
• New oil and gas projects. Chevron has commenced production at a field off the coast of Angola (first oil emerged in summer 2025), while Italian Eni is considering similar steps in Mozambique and Nigeria. Development ministries in BRICS countries have announced plans to boost oil production in aging fields using Enhanced Oil Recovery technologies.
• Investments in RES. Among the strategies of major companies is diversification. For example, Swedish Vattenfall is seeking government funding to construct new nuclear reactors as part of its "green" strategy; Chinese CATL is investing in European battery manufacturing plants. In Asia, the number of joint ventures in renewable energy is growing.
• Preparing for 2026. Many research organizations and financial players expect that in 2026, oil and gas reserves will continue to grow, prompting a tightening of supply. Experts forecast a potential reduction in capital investments from Western companies by 10–15% by the end of 2026, focusing on new technologies (E&P in Arctic, deepwater) and the digitalization of production.