Oil, Gas, and Energy Sector News for Monday, December 29, 2025. Global oil and gas markets, electricity, renewable energy, coal, petroleum products, and refineries: key events, trends, and investor expectations.
In this issue, we provide an overview of key events in the fuel and energy complex (FEC) for the end of 2025 and investor expectations for 2026. Global oil, gas, and electricity markets are stabilizing after a turbulent year: after summer demand drop-offs, prices have started to rise moderately. Geopolitical uncertainty persists, but some optimists hope for a relaxation of sanctions and a restoration of normal exports. Meanwhile, the trend towards increasing production and expanding "green" energy is gaining momentum, while coal and gas remain significant for ensuring energy balance during peak loads.
Global Oil Market: Moderate Growth Amid Supply Surplus
Brent is trading in the range of $61–63 per barrel, while WTI is around $57–59, which is 15–20% lower than a year ago. The oil market is exhibiting relative stability after a decline in demand throughout 2025. Key influencing factors include:
- OPEC+ Policy: OPEC+ countries decided at the end of November to maintain production at the levels of late 2025, opting against the planned increase in quotas for Q1 2026. This has led to limited price growth while keeping the alliance's market share below historical highs.
- Increased Production in the U.S.: Independent oil producers in the U.S. are expanding shale production, bringing output to a record ~13 million barrels per day. The surplus supply is putting downward pressure on the price of oil and petroleum products.
- Global Demand: Oil consumption is growing moderately (according to IEA and OPEC estimates, not more than +0.8–1.0% in 2025), significantly lower than the pace in 2023. Economic growth slowdown and energy-saving measures limit the appetites of major consumers, especially in China.
- Geopolitics and Sanctions: Situations in the Middle East (strikes on oil facilities, escalation of conflicts) and Africa periodically cause price fluctuations, but the global market is responding cautiously. Negotiations for peace in Ukraine have generated optimism regarding the potential easing of some sanctions: currently, Russian oil is being sold at a significant discount (Urals ~$40/barrel, notably lower than Brent).
European Gas Market: Record Stockpiles and Sudden Demand Surges
The European gas market is entering winter with unprecedentedly high reserves in underground storage, which has driven prices down to yearly lows (TTF fell to ~$330/thousand m3, approximately €28/MWh). However, the New Year cold has activated demand: gas withdrawals from storage reached record levels, causing prices to rebound to ~$345/thousand m3. Main trends include:
- Decline in Russian Imports: EU countries have effectively reduced reliance on Russian pipeline gas – the share of Russia in imports has fallen to 10–15%. Alternate supplies are filling the gap: LNG imports from the U.S., Africa, and the Middle East have surged, with new regasification infrastructure being deployed (new terminals are under construction in Germany and Spain).
- U.S.-EU LNG Deal: The agreement for energy supplies worth $750 billion from 2026-2028 is progressing slowly. Due to falling prices, the EU has cut back on its purchases of U.S. LNG (from September to December 2025, imports from the U.S. amounted to around $29.6 billion, significantly below annual commitments). Low prices have diminished economic incentives.
- Weather Risks: Even with high stockpiles, gas reacts to extreme cold. New price spikes may occur during prolonged cold spells. Additionally, environmental restrictions on production (emissions) limit gas production capacity in Europe.
- Demand in Asia: China and India are actively importing LNG for winter needs. China is expanding its domestic production but remains the largest global importer of gas and oil. India is increasing its purchases of cheap gas and oil from Russia, bolstering global demand.
Asia: Record Production in China and Growing Imports in India
- China: Domestic oil and gas production is hitting historical records. By the end of 2025, oil output exceeded 4.3 million barrels per day, and gas production reached new highs. Beijing is investing in expanding refineries and energy generation capacities, reducing dependency on imports. Economic slowdown has constrained domestic demand growth, but China remains the largest global consumer of energy resources.
- India: Despite pressure from the U.S. and new restrictions, refineries continue to source Russian crude. In December, oil imports from Russia to India are estimated at over 1.2 million barrels per day (after a record 1.77 million in November) as refineries rushed to secure cheap raw materials before new sanctions took effect. Talks between Modi and Putin reaffirmed commitment to energy partnerships.
- Southeast Asia: Countries in the region are continuing to build coal-fired power plants to sustain industrial growth. High demand for cheap electricity is delaying the transition away from coal as new plants are being commissioned in Vietnam, the Philippines, and other countries.
Renewable Energy: Record Capacities and Investments
The trend towards "clean" energy is intensifying: in 2025, the world installed a record capacity of renewable energy (~750 GW), with investments in "green" energy surpassing $2 trillion. New solar and wind power plants are providing significant portions of electricity in many countries. Nonetheless, important features remain:
- Hybrid Systems: Even with rapid growth in renewable energy, coal, gas, and nuclear remain necessary for the reliability of energy systems. Global energy consumption is still approximately 80% reliant on fossil fuels. During peak load periods (or during calms or nighttime generation), countries are forced to activate gas or coal plants to avoid blackouts.
- Regional Characteristics: Leaders in renewable energy deployment are developed countries and China. The U.S. and EU are rolling out subsidy programs to incentivize energy storage and localization of renewable equipment, while maintaining strategic reserves of oil and gas for any disruptions. Concurrently, China is building hydropower and nuclear power plants to balance energy systems while simultaneously boosting hydrocarbon production.
- Electricity Market: Frequent "overproduction" of renewable energy is leading to decreased electricity prices during peak hours (in Europe and China, negative prices occasionally occur). The growing share of clean generation is driving the development of energy storage infrastructure and modernization of grids, as well as a carbon quota market to limit emissions. Overall annual trends confirm a sustainable transition, but traditional thermal power plants will remain in the grid for an extended period.
Coal Market: Stable Demand and Moves Towards "Greening"
Coal continues to play a significant role in the energy balance. Global coal consumption reached a record ~8.8 billion tons by the end of 2025, about 0.5% higher than in 2024. The primary growth is coming from Asia:
- China and India: These countries continue to actively burn coal for electricity generation and steel production. While some old mines are closing, new large coal-fired power plants are being commissioned (over 50 GW of new projects in China). India is rapidly expanding its coal generation to meet the growing demands of its economy.
- Exporters and Prices: Indonesia, Australia, Russia, and South Africa are maintaining high production and supply volumes. Prices for thermal coal have stabilized around $120–140/ton (Newcastle index), which is lower than last year's peaks but ensures profitability for the industry. Coal stockpiles at Asian import terminals are adequate, preventing sharp price spikes.
- Developed Countries' Decline: In the U.S. and Europe, coal generation is actively declining. Environmental restrictions and the rise of renewables have led to double-digit decreases in coal's share of the energy balance in the West. However, globally, the trend towards "greening" is being offset by increased demand in developing countries.
Russian Oil Products Market: Government Measures and Prices
In Russia, following the summer price increases for gasoline and diesel, the government has taken measures to stabilize the market:
- Export Restrictions on Fuels: The ban on gasoline and diesel exports for most companies (with exceptions for government contracts) has been extended until the end of 2025. This has allowed for the release of additional volumes on the domestic market, curbing wholesale price increases.
- Price Dampening System: From October 1, 2025, the "deviation from norm" for the price dampening mechanism for gasoline and diesel is temporarily not being considered. This has increased subsidies for refiners and reduced wholesale prices. For instance, mid-December prices for AI-95 gasoline were 8–10% lower than September highs.
- Current Situation: Wholesale fuel prices continue to decrease moderately, and there is no market shortage. Fuel inventories and supplies from refineries are ensuring stability until January. Authorities consider the situation stable but are prepared to introduce new measures should global prices rise.
