Oil and Gas Industry News — Saturday, January 17, 2026: Toughening Sanctions, Oil Surplus, and Gas Supply Diversification. Oil, Gas, Electricity, Renewable Energy Sources, Coal, Refineries — Key Trends in the Fuel and Energy Sector for Investors and Market Participants.
At the beginning of 2026, the fuel and energy sector is grappling with ongoing geopolitical confrontations and a significant restructuring of global energy resource flows. Western countries are intensifying sanctions against Russia - the European Union is imposing new restrictions on energy trade. Concurrently, the global oil market is experiencing an excess supply: slowing demand and the return of certain producers (such as Venezuela) are keeping the price of Brent around $60 per barrel. The European gas market is undergoing historic transformations: as of January, gas supplies from Russia have essentially ceased, yet high stocks in EU underground gas storage and a diversification of sources (from LNG to Azerbaijani gas) are currently ensuring price stability this winter. The energy transition is gaining momentum: 2025 witnessed a record installation of renewable energy capacities, although a reliance on traditional resources remains crucial for the reliable operation of energy systems, while in Asia, demand for coal and hydrocarbons continues to be elevated, supporting the global raw materials market. In Russia, following last year’s surge in gasoline prices, authorities have extended emergency restrictions on the export of petroleum products, seeking to maintain stability in the domestic fuel market.
Oil Market: Global Surplus Keeps Prices in Check
Global oil prices at the beginning of 2026 remain relatively stable, holding in a moderate range. The benchmark Brent is trading around $60–65 per barrel, while the American WTI is in the $55–60 range. The market shows an excess supply of approximately 2.5 million barrels per day. This is due to OPEC+ countries increasing production in the second half of 2025, aiming to regain lost market shares. Additionally, oil output in the USA remains high, and the partial return of Venezuelan volumes to the market after the easing of sanctions has bolstered supply.
Demand for oil is growing at a slower pace. The economic slowdown in China and energy-saving measures following a period of high prices in previous years restrict global consumption growth. In this context, analysts predict that oil prices could fall to $55 per barrel in 2026, at least in the first half of the year, unless producers intervene. A key factor is OPEC+ policy: if the alliance continues to increase supply or delays new production restrictions, prices will remain under pressure. Leading exporters are unlikely to allow a market collapse and can re-adjust output to support prices if necessary. Geopolitical risks are present, but so far have not resulted in supply disruptions.
Gas Market: Europe Seeks Alternatives to Russian Gas
The European gas market enters 2026 with a new reality: the near-complete cessation of pipeline gas imports from Russia. According to the EU's decision, a ban on these supplies has been in effect since January 1, depriving Europe of about 17% of its previous imports. EU member states have preemptively filled underground gas storage facilities to over 90%. Despite the winter season, gas extraction from these storages is proceeding in a controlled manner, without sharp price spikes. Gas exchange prices in Europe remain significantly lower than the peaks of 2022, reflecting a relative market balance.
To compensate for the declining volumes of Russian gas, the EU is focusing on several directions:
- Maximizing pipeline supplies from Norway and North Africa;
- Increasing LNG imports from the USA, Qatar, and other countries;
- Expanding the use of the Southern Gas Corridor from Azerbaijan;
- Reducing demand through energy-saving measures.
The combination of these measures allows Europe to relatively smoothly navigate the current heating season, despite the cessation of supplies from Russia. Simultaneously, Russia is redirecting gas exports eastward: Gazprom announced a new record in daily supplies to China via the Power of Siberia pipeline in early January.
International Politics: Sanctions and Energy
The sanctions confrontation between Moscow and the West continues to escalate. At the end of 2025, the EU approved a 19th package of measures, a significant portion of which targets the energy sector. These include a reduction in the oil price cap on Russian oil from February 2026 and a decision to entirely ban the import of Russian LNG starting from 2027. In response, Moscow has extended its own embargo on oil sales to price cap participants until June 30, 2026.
Russian oil and oil products exports are still holding at a relatively high level thanks to the redirection of flows to Asia, where China, India, Turkey, and other countries are purchasing raw materials at a significant discount. Consequently, the global energy market has effectively split into two parallel circuits — a western (sanctioned) and an alternative one, where Russian hydrocarbons continue to find demand albeit at reduced prices. Investors and market participants are closely monitoring the sanctions policy, as any changes impact logistics and the pricing environment of raw material markets.
Energy Transition: Records and Balance
The global shift to clean energy in 2025 was marked by unprecedented growth in renewable generation. Many countries have introduced record capacities of solar and wind power plants. In the EU, around 85–90 GW of new renewable energy installations were added in a year, while the share of renewable energy in the USA exceeded 30%, and China commissioned dozens of gigawatts of "green" power plants, setting new records.
The rapid increase in renewable energy has raised concerns about the reliability of power systems. During periods of calm or lack of sunlight, backup capacities from traditional power plants are still required to meet peak demand and prevent disruptions. Therefore, energy storage projects are actively being developed worldwide — large battery farms are being constructed, and technologies for storing energy in the form of hydrogen and other carriers are being researched.
BP's experience, which decided to cut investments in renewable energy and write off several billion dollars in "green" assets, has shown that even oil and gas giants must balance between environmental goals and profitability. Despite the rapid growth of the renewable sector, the bulk of profits still comes from traditional oil and gas operations. Investors are demanding a cautious approach: "green" projects need to be developed without compromising financial stability. The energy transition continues, but the lesson from 2025 is the necessity for a more balanced strategy that combines accelerated implementation of renewable energy with maintaining the reliability of energy systems and investment returns.
Coal: High Demand in Asia
The global coal market in 2025 remained robust, despite global goals to reduce coal use. The main reason is the consistently high demand in Asia. Countries such as China and India continue to burn vast amounts of coal for electricity generation and industrial needs, compensating for falling consumption in Western economies.
China accounts for nearly half of global coal consumption and, even with an output exceeding 4 billion tons per year, is forced to increase imports during peak periods. India is also ramping up production, but with its economy growing rapidly, it must import significant volumes of fuel, primarily from Indonesia, Australia, and Russia.
High Asian demand is keeping coal prices at a relatively elevated level. Major exporters, from Indonesia and Australia to South Africa, have increased revenue thanks to steady orders from China, India, and other countries. In Europe, following a temporary surge in coal use in 2022–2023, its share is once again declining due to the development of renewable energy and the resumption of nuclear generation. Overall, despite climate agendas, coal will maintain a significant portion of the global energy balance in the coming years, although investments in new coal capacities are gradually decreasing.
Russian Market: Restrictions and Stabilization
The Russian government has been manually restraining fuel price growth since the fall of 2025. Following a record rise in wholesale gasoline and diesel prices in August, a temporary ban on the export of key petroleum products was imposed and extended until February 28, 2026. The restrictions apply to the export of gasoline, diesel, fuel oil, and kerosene, and have already shown results: wholesale prices decreased by several tens of percent from their peak levels by winter. Retail price increases slowed down, and by the end of the year, the situation stabilized — gas stations are adequately supplied with fuel, and panic buying has subsided.
For oil companies and refineries, these measures mean lost profits, but authorities are demanding that businesses "tighten their belts" for the sake of market stability. The production cost of oil at most Russian fields is low, so even a price for Russian oil below $40 is not critical for profitability. However, reducing export revenues threatens the launch of new projects that require higher global prices and access to external sales markets.
The government refrains from direct compensations to the sector, asserting that the situation is under control and that energy companies are still making profits even with reduced exports. The domestic fuel and energy sector is adapting to new conditions. The main task for 2026 is to maintain a balance between restraining domestic energy prices and supporting export revenues, which are vital for the budget and sector development.
