Oil and Gas News and Energy — Saturday, 17 January 2026: Sanctions Tighten, Oil Surplus Persists, and Gas Supply Diversification. Oil, gas, electricity, renewable energy sources (RES), coal, and oil refineries — key trends in the fuel and energy complex for investors and market participants.
At the beginning of 2026, the fuel and energy complex continues to face ongoing geopolitical tensions and a substantial restructuring of global energy resource flows. Western nations are intensifying sanctions against Russia, with the European Union imposing new restrictions on energy trade. Simultaneously, a surplus of oil supply characterises the global market: declining demand and the return of certain producers (such as Venezuela) are keeping Brent prices around $60 per barrel. The European gas market is undergoing historical changes: as of January, gas supplies from Russia have effectively ceased, yet high reserves in EU underground storage and diversification of sources (ranging from LNG to Azerbaijani gas) are currently stabilising prices this winter. The energy transition is gaining momentum: 2025 witnessed a record introduction of renewable energy capacity, although traditional resources remain essential for the reliable operation of energy systems, while in Asia, demand for coal and hydrocarbons remains high, supporting the global commodities market. In Russia, after last year's spike in gasoline prices, authorities have extended extraordinary restrictions on oil product exports in an effort to maintain stability in the domestic fuel market.
Oil Market: Global Surplus Holds Prices Down
Global oil prices at the start of 2026 remain relatively stable, remaining within a moderate range. The benchmark Brent is trading around $60–65 per barrel, while American WTI hovers around $55–60. The market is experiencing an oversupply of approximately 2.5 million barrels per day. This situation arises as OPEC+ countries increased production in the second half of 2025 in an attempt to regain lost market shares. Furthermore, oil production in the United States remains high, and the partial return of Venezuelan volumes to the market following the easing of sanctions has increased supply.
Demand for oil is growing at a slower pace. Slowing economic growth in China and energy conservation following periods of high prices in previous years are limiting global consumption growth. Against this backdrop, analysts predict that oil prices may drop to $55 per barrel in 2026, at least in the first half of the year, unless producers intervene. A crucial factor is the OPEC+ policy: if the alliance continues to increase supply or delays implementing new production restrictions, prices will remain under pressure. Leading exporters are unlikely to allow a market collapse and may reduce production again if necessary to support prices. Geopolitical risks are present but currently are not disrupting supplies.
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. Following a decision from the EU, a ban on these supplies took effect on 1 January, removing about 17% of Europe’s previous imports. EU countries preemptively filled gas underground storage facilities to over 90%. Despite winter conditions, gas withdrawal from storage is being managed without sharp price fluctuations. Exchange prices for gas in Europe remain significantly lower than the peaks of 2022, reflecting relative market equilibrium.
To compensate for the loss of Russian gas volumes, the EU is focusing on several directions:
- Maximising 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 conservation.
The combination of these measures allows Europe to navigate the current heating season relatively calmly, despite the cessation of supplies from Russia. Concurrently, Russia is redirecting its gas exports eastward: Gazprom reported a new record for daily supplies to China via the Power of Siberia pipeline at the beginning of January.
International Politics: Sanctions and Energy
The sanction-based confrontation between Moscow and the West continues to intensify. At the end of 2025, the EU approved its 19th package of measures, a substantial portion of which targets the energy sector. Among them is a reduction of the price cap on Russian oil effective from February 2026, and a decision to fully ban the import of Russian LNG by 2027. In response, Moscow has extended its own embargo on oil sales to participants in the price cap until 30 June 2026.
Russian export levels of oil and oil products remain relatively high, largely due to redirected flows to Asia, where countries like China, India, and Turkey are purchasing raw materials at significant discounts. As a result, the global energy market has essentially split into two parallel frameworks — a Western (sanctions-based) segment and an alternative one, where Russian hydrocarbons continue to find demand, albeit at lower prices. Investors and market participants are closely monitoring sanction policies, as any changes affect logistics and pricing dynamics in commodity markets.
Energy Transition: Records and Balance
The global shift toward 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 capacity was added over the year, the share of renewable energy in the USA exceeded 30%, and China introduced tens of gigawatts of "green" power plants, renewing its own records.
The rapid expansion of renewable energy sources has raised questions about the reliability of energy systems. During calm periods or times without sunlight, backup capacities from traditional power plants are still required to cover peak demand and prevent disruptions. As a result, energy storage projects are actively being developed worldwide — large battery farms are being constructed, and technologies for storing energy as hydrogen and other carriers are being researched.
The experience of BP, which chose to reduce investments in renewable energy sources and write off several billion dollars in "green" assets, has shown that even oil and gas giants must balance ecological goals with profitability. Despite significant growth in the renewable sector, traditional oil and gas businesses continue to generate the majority of profits. Investors are calling for a cautious approach: "green" projects need to be developed without compromising financial stability. The energy transition continues, but the lesson of 2025 is the necessity for a more balanced strategy, combining the rapid implementation of renewable energy sources with the maintenance of energy system reliability and profitability of investments.
Coal: High Demand in Asia
The global coal market in 2025 remained on the rise, despite global goals for reducing coal usage. The primary reason is persistently 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 declines in consumption in Western economies.
China accounts for nearly half of the world's coal consumption and, even with production exceeding 4 billion tonnes per year, has to increase imports during peak periods. India is also ramping up production, but with rapid economic growth, it must import significant volumes of fuel, mainly from Indonesia, Australia, and Russia.
High demand in Asia supports coal prices at relatively high levels. Major exporters — from Indonesia and Australia to South Africa — have increased revenues thanks to stable orders from China, India, and other countries. In Europe, after a temporary spike in coal usage in 2022–2023, its share is declining again due to the development of renewable energy sources and the resumption of nuclear power generation. Overall, despite the climate agenda, coal will maintain a significant part of the global energy balance in the coming years, although investments in new coal capacities are gradually decreasing.
The Russian Market: Restrictions and Stabilisation
The Russian government has been manually curbing fuel price growth since autumn 2025. After wholesale prices for gasoline and diesel reached record levels in August, a temporary export ban on key oil products was introduced, extended until 28 February 2026. The restrictions apply to the export of gasoline, diesel, fuel oil, and gas oils and have already had an effect: wholesale prices have decreased by tens of percent from peak levels by winter. The growth of retail prices has slowed, and by the end of the year, the situation has stabilised — petrol stations are adequately supplied with fuel, and panic buying has dissipated.
For oil companies and refineries, these measures mean lost profits, but authorities are insisting on the business sector "tightening their belts" for the sake of market stability. The cost of oil production in most Russian fields is low, so even a price for Russian oil below $40 is not critical for profitability. However, reduced export revenues jeopardise the launch of new projects that require higher international prices and access to external markets.
The government refrains from direct compensation for the sector, asserting that the situation is under control and that companies in the fuel and energy complex are still making profits even amidst declining exports. The domestic fuel and energy sector is adapting to new conditions. The main challenge for 2026 will be to maintain a balance between restraining domestic energy prices and supporting export revenues, which are essential for the budget and sector development.
