Oil and Gas Sector News for Monday, 29 December 2025. Global Oil and Gas Markets, Electricity, Renewable Energy, Coal, Oil Products, and Refineries: Key Events, Trends, and Investor Expectations.
In this issue, we provide an overview of the key events in the fuel and energy complex (FEC) at the end of 2025 and investor expectations for 2026. The global oil, gas, and electricity markets are stabilizing after a tumultuous year: following summer demand drops, prices have started to rise modestly. Geopolitical uncertainty remains, but some optimists hope for easing sanctions and a return to normal exports. Meanwhile, the trend of increasing production and expanding "green" energy is strengthening, while coal and gas continue to play important roles in ensuring the energy balance during peak loads.
Global Oil Market: Moderate Growth Amid Supply Surplus
Brent is trading around $61–63 per barrel, while WTI hovers around $57–59, approximately 15–20% below last year's levels. The oil market is displaying relative stability after a decrease in demand throughout 2025. Key influencing factors include:
- OPEC+ Policy: OPEC+ countries decided in late November to maintain production levels from the end of 2025, forgoing any planned increase in quotas for Q1 2026. This has led to limited price growth, but has simultaneously kept the alliance's market share below historical highs.
- US Production Increases: Independent oil producers in the US are expanding shale production, bringing output to a record ~13 million barrels per day. The oversupply is pressuring the prices of oil and petroleum products.
- Global Demand: Oil consumption is growing moderately (according to IEA and OPEC estimates, no more than +0.8–1.0% in 2025), significantly lower than growth rates in 2023. Slowing economic growth and energy-saving measures are limiting the appetites of major consumers, particularly in China.
- Geopolitics and Sanctions: Situations in the Middle East (attacks on oil facilities, conflict escalation) and in Africa are periodically causing price fluctuations, but the global market is reacting cautiously. Peace negotiations in Ukraine have generated optimism regarding the easing of some sanctions; meanwhile, Russian oil is selling at a substantial discount (Urals ~$40/barrel, significantly below Brent).
European Gas Market: Record Reserves and Sharp Demand Spikes
The European gas market is heading into winter with unprecedented high reserves in underground storage, which have driven prices to yearly lows (TTF fell to ~$330/thousand m3, approximately €28/MWh). However, the New Year cold snap has activated demand: gas withdrawals from storage have reached record levels, and prices have bounced back to ~$345/thousand m3. Key trends include:
- Decline in Russian Imports: EU countries have nearly ceased imports of Russian pipeline gas—the share of Russia in imports has dropped to 10-15%. Most supplies are now covered by alternative sources: LNG imports from the US, Africa, and the Middle East have surged, and regasification infrastructure is being expanded (new terminals are being launched in Germany and Spain).
- US-EU LNG Deal: The agreement on energy supply of $750 billion for 2026–2028 is progressing slowly. Due to a fall in prices, the EU has reduced its purchase volumes of American LNG (from September to December 2025, supplies to the EU from the US amounted to about $29.6 billion, significantly lower than annual commitments). Low prices have diminished the economic motivation.
- Weather Risks: Even with high reserves, gas prices remain sensitive to extreme cold weather. New price spikes may occur with prolonged cold spells. Furthermore, environmental restrictions on production (emissions) limit gas production capabilities in Europe.
- Asian Demand: China and India are both actively importing LNG for winter needs. China is expanding its own production but remains the largest global importer of gas and oil. India is increasing its purchases of cheap gas and oil from Russia, supporting global demand.
Asia: Record Production in China and Increasing Imports in India
- China: Domestic oil and gas production is setting historical records. By the end of 2025, oil output exceeded 4.3 million barrels per day, and gas production reached new heights. Beijing is investing in expanding refining and power generation capacities to reduce dependence on imports. Economic slowdown has limited domestic demand growth, but China remains the largest global buyer of energy resources.
- India: Despite pressures from the US and new restrictions, refineries continue to source Russian crude. In December, oil supplies from Russia to India are estimated at over 1.2 million barrels per day (after a record 1.77 million in November) as refineries hurried to secure cheap crude ahead of new sanctions. Talks between Modi and Putin reaffirmed their commitment to energy partnership.
- Southeast Asia: Countries in the region continue to build coal-fired power plants to support industry. The high demand for affordable electricity restrains the move away from coal, with new power plants being commissioned in Vietnam, the Philippines, and other countries.
Renewable Energy: Record Capacities and Investments
The trend towards "clean" energy is strengthening: in 2025, the world installed record renewable energy capacities (~750 GW), and investments in green energy exceeded $2 trillion. New solar and wind power plants are providing a significant share of electricity in many countries. However, several important features persist:
- Hybrid Systems: Even with rapid growth in renewables, coal, gas, and nuclear energy remain essential for the reliability of energy systems. Global energy consumption is still approximately 80% reliant on fossil fuels. During peak loads (or in low wind/night generation), countries are forced to activate gas or coal plants to avoid outages.
- Regional Features: Leaders in renewable energy adoption are developed countries and China. The US and EU are rolling out subsidy programs to accumulate and localize renewable energy equipment, while strategic reserves of oil and gas are maintained in case of disruptions. China, meanwhile, is building hydropower and nuclear plants to balance the energy system while supporting hydrocarbon production expansion programs.
- Electricity Market: Frequent "oversupply" events in renewables are leading to decreased electricity prices during peak hours (in Europe and China, negative prices occasionally occur). The increasing share of clean generation is stimulating energy storage infrastructure development and network modernization, as well as the carbon quota market to limit emissions. Overall annual trends confirm a stable transition; however, traditional thermal power plants will remain in the network for the foreseeable future.
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 in 2025, a 0.5% increase from 2024 levels. The main increase is driven by Asia:
- China and India: These countries continue to burn coal extensively for electricity generation and steel production. While some old mines are closing, new large coal power plants are being commissioned (over 50 GW of new projects in China). India is rapidly expanding coal generation to meet the growing demands of its economy.
- Exporters and Prices: Indonesia, Australia, Russia, and South Africa maintain high levels of production and supply. Prices for thermal coal have stabilized around $120–140/ton (Newcastle index), below last year's peaks, but still ensure sector profitability. Coal stocks at terminals in Asian importers are sufficient, preventing sharp price spikes.
- Developed Countries' Retreat: In the US and Europe, coal generation is actively being reduced. Environmental regulations and the rise of renewables have led to double-digit reductions in coal’s share in the Western energy balance. However, globally, the trend towards "greening" is offset by increased demand in developing countries.
Russian Oil Products Market: State Measures and Prices
In Russia, after a summer hike in gasoline and diesel prices, the government has implemented measures to stabilize the market:
- Export Restrictions on Fuel: The ban on fuel exports has been extended until the end of 2025 for most companies (excluding government contracts). This has helped release additional volumes into the domestic market and curb wholesale price increases.
- Damping System: From 1 October 2025, the "norm deviation" for the damping mechanism for gasoline and diesel is temporarily not considered. This has increased subsidies for oil refiners and lowered wholesale prices. For example, the exchange price for AI-95 in mid-December was 8-10% lower than the September peaks.
- Current Situation: Wholesale fuel prices continue to decrease moderately, and there is no deficiency in the market. Fuel stocks and supplies from refineries ensure stability until January. Authorities consider the situation stable but are prepared to introduce new measures if global prices rise.
