Energy Sector News for Sunday, 7 December 2025: Oil and Gas Prices, OPEC+ Decisions, Sanction Pressure on the Russian Energy Sector, Fuel Situation in Russia, Role of the EU, USA, China, and India, Coal Market Trends, Renewable Energy and Oil Products — Analytical Review for Investors and Participants in the Global Energy Sector.
Key events in the global fuel and energy sector (TES) as of 7 December 2025 indicate that world markets continue to balance between an oversupply of resources and geopolitical risks. Oil prices remain near two-year lows: Brent crude is trading at around $62–64 per barrel, while US WTI is approximately $59. These levels are significantly lower than mid-year figures, as the market is impacted by increased supply coupled with relative stability in demand and cautious optimism regarding potential progress in peace negotiations concerning Ukraine. The European gas market is entering winter with no signs of shortage: underground gas storage in the EU is still around 75–80% full, while wholesale prices (TTF hub) are maintained at approximately €28–30 per MWh, which is significantly lower than extreme peaks in previous years. Record LNG supplies and mild weather at the start of the season are providing stability and relatively low gas prices.
Meanwhile, geopolitical tensions surrounding energy markets persist. Western countries are not easing sanctions pressure on the Russian oil and gas sector: the European Union is legally formalising a complete cessation of imports of Russian pipeline gas by 2027 and is striving to accelerate the reduction of oil purchases from the Russian Federation. Efforts by diplomats to achieve breakthroughs in conflict resolution have not yet yielded tangible results, although the US and Ukraine held consultations in early December regarding a peace plan. Energy supplies remain at risk due to potential military incidents; however, the global market is currently compensating for local disruptions. Within Russia, the authorities are extending emergency measures to stabilise the fuel market following an autumn fuel crisis — the export of oil products remains tightly controlled to saturate the domestic market. Simultaneously, the global energy sector is accelerating its "green" transition: investments in renewable energy sources are reaching new records, and leading economies are declaring ambitious plans to reduce dependence on fossil resources.
Oil Market: Prices at Two-Year Lows Due to Oversupply and Hopes for Peace
- Global Supply: The global oil market remains oversaturated. OPEC+ countries and other producers are collectively extracting more oil than the market consumes at current demand levels. Commercial stocks of crude in key regions are at high levels, increasing downward pressure on prices.
- OPEC+ Decisions: The cartel and its allies are showing caution. At the latest meeting, leading OPEC+ members agreed to maintain production quotas for the first quarter of 2026 at the levels of December 2025, effectively extending current restrictions. The coalition is prepared to adjust production quickly if necessary: a reserve capacity of around 1.65 million bpd can be gradually returned to the market if conditions require it.
- US Production at a Peak: Oil production in the United States is near record levels. Despite a reduction in active drilling rigs, technological efficiency allowed for new highs by mid-2025 (production in the continental states exceeded 11 million bpd). High production levels in the US are adding significant volumes to the market, compensating for some of OPEC+ cuts.
- Local Disruptions: Recent incidents have only temporarily affected exports. In early December, Ukrainian drones damaged one of the terminals of the Caspian Pipeline Consortium on the Black Sea, through which Kazakh oil is exported, but shipments quickly resumed through a backup terminal. Additionally, the largest oil loading terminals in Libya were temporarily closed on 5-6 December due to a storm. These events did not cause price spikes — the market is capable of absorbing short-term disruptions, given the current balance of supply and demand.
- Price Benchmarks: Brent is holding within a narrow range of $62–64 per barrel (more than 20% below early autumn levels). Investors expect that in the near term, prices will remain restrained: no sharp revival in demand is anticipated, while the easing of monetary policy in the US only moderately supports commodity markets. At the same time, any new geopolitical shock (escalation of conflict or significant supply interruptions) could cause a brief price surge.
Gas Market: Europe Enters Winter with Comfortable Supplies and Low Prices
- High Storage Levels: By early December, European gas storage facilities were approximately ¾ (75–80%) full. Stocks are gradually declining with the onset of colder weather but still significantly exceed average levels for this time of year. This created safety reserves that sharply reduce the risk of gas shortages in the height of winter.
- Record LNG Imports: LNG supplies to Europe remain historically high. Weakened demand for LNG in Asia has released additional volumes for the European market, partially compensating for the halt in pipeline supplies from Russia. The US has taken a prominent role, increasing LNG exports and becoming a key external gas supplier for the EU amidst rising demand.
- Diversification of Sources: European countries are bolstering energy security through alternative suppliers. Gas purchases from Norway, Algeria, Qatar, Nigeria, and other regions are on the rise. New infrastructure — from LNG terminals to international interconnectors — is operating at maximum capacity, ensuring a stable flow of fuel from various parts of the world.
- Low Prices: Wholesale gas prices in the EU are presently an order of magnitude lower than the peak values of 2022. The Dutch TTF index is holding below €30 per MWh (around $330 per thousand cubic meters) and has seen a gradual decrease for the third consecutive week. Despite seasonal increases in consumption and occasional declines in renewable energy output, the market remains balanced due to ample supply. It has so far avoided new price spikes.
Russian Market: Fuel Shortages and Extension of Export Restrictions
- Ban on Fuel Exports: The Russian government introduced a temporary ban on the export of automotive gasoline by all producers and traders (except for minimal supplies under intergovernmental agreements) as early as late August. Initially, this measure was intended to last until October, but the autumn fuel crisis forced its extension: in effect, the ban remains in force until the end of the year to maximise domestic gasoline supply.
- Restrictions on Diesel: Simultaneously, a ban on diesel fuel exports for independent traders has been extended until the end of 2025. Oil companies with their own refineries are allowed limited diesel exports to prevent processing from halting due to overflowing tanks. These measures aim to prevent a recurrence of the fuel shortage that caused a spike in wholesale prices during the autumn.
- Domestic Stabilisation: Thanks to these measures, the situation at petrol stations has significantly improved. Prices for gasoline and diesel fuel have retreated from the September peaks and stabilised under government control. Long-term regulatory mechanisms are also being considered — adjustments to the damping mechanism, preferential lending for independent petrol stations, and changes to the tax burden — to avoid new supply disruptions in the future.
- Production and Redirecting Exports: Russian oil production at the end of 2025 is around 9.5 million bpd, in line with OPEC+ quotas. Meanwhile, oil exports have been redirected from Europe to Asia: buyers from India, China, and other Asian countries are purchasing Russian oil at a discount to world prices. In the gas sector, pipeline gas exports to Europe have been reduced to minimum levels; however, supplies to China via the "Power of Siberia" pipeline have reached unprecedented levels, partially compensating for lost markets.
Sanctions and Policy: Increased Western Pressure Amid Dialogue Attempts
- Long-term EU Restrictions: Brussels is solidifying its legislative retreat from Russian energy resources. On 4 December, EU institutions approved regulations stipulating that imports of Russian pipeline gas must be completely halted by 1 November 2027. Concurrently, EU countries intend to accelerate the reduction of remaining purchases of Russian oil and oil products, despite potential impacts on their own oil refiners.
- G7 Measures: The Group of Seven and its allies maintain strict sanctions against the Russian energy sector. A price cap on Russian oil is in place, as well as an embargo on many types of oil products. Financial restrictions complicate transactions and insurance for deals involving Russian oil and gas. Although some Asian importers continue to increase purchases from Russia, circumventing sanctions, the collective West is showing no signs of readiness to ease the sanctions regime until the conflict is resolved.
- Diplomacy and Negotiations: In the past week, the US and Ukraine held several rounds of consultations on peaceful resolution, developing the framework for a potential agreement. These contacts have generated cautious optimism regarding the precursors to initiating a peace process. However, Russia is not participating in these negotiations, and hostilities continue without a noticeable decrease in intensity. There are currently no real grounds for lifting sanctions or easing geopolitical standoffs.
- Market Risks: The situation remains tense. Attacks on energy infrastructure within the conflict continue: strikes on oil terminals, gas facilities, and power grids are increasing uncertainty. Any escalation affecting export routes (such as oil transit through the Black Sea or remaining gas supplies via Ukraine) could destabilise the markets. Nonetheless, the global energy supply system is demonstrating resilience to local shocks, and market participants are hopeful for the avoidance of direct confrontation between NATO and Russia that could trigger a global energy shock.
Asia: India and China Strengthening Energy Security
- India's Position: Under pressure from the West, New Delhi temporarily reduced purchases of Russian oil in late autumn, but overall, India remains one of Moscow’s largest clients. Indian refineries are actively processing affordable Urals oil, meeting domestic fuel needs. Surplus oil products are exported by Indian companies, including to European markets, essentially bringing Russian barrels to final consumers after refining.
- China’s Strategy: Despite an economic slowdown, Beijing maintains a key role in the global energy market. Chinese importers are diversifying their supply channels: new long-term contracts for LNG procurement (with Qatar, the USA, etc.) have been signed, and pipeline gas supplies from Russia are increasing (volumes via "Power of Siberia" reached record levels this autumn). Concurrently, China is boosting its strategic oil reserves and stimulating an increase in its domestic production to reduce dependence on external sources.
- Rising Demand: Developing economies in Asia continue to increase energy resource consumption. In 2025, regional demand for oil and natural gas grew, although the pace has somewhat slowed due to high prices from the previous year and more moderate GDP growth. India is experiencing sustained increases in fuel usage (petrol, diesel) as its vehicle fleet and industrial activities expand. China is focusing on gasification and electrification of its economy, sustaining high demand for natural gas and electricity. The long-term objective for both countries is to meet energy needs without compromising environmental goals; thus, renewable energy capacity is also rapidly increasing.
Renewable Energy: Record Investments Supported by Governments
- Record Growth: The year 2025 has seen another record year for investment in renewable energy sources. According to analysts, global investments in "green" energy have exceeded $1 trillion, outpacing capital expenditure on fossil fuels. Renewable energy capacity is growing at an unprecedented pace: over 300 GW of new solar and wind power plants have been brought online worldwide in a year, exceeding last year’s figures.
- Climate Policy: At the COP30 climate summit held in November in Brazil, the global community reaffirmed its commitment to an accelerated energy transition. Countries agreed to aim for tripling established renewable energy capacities by 2030 and set an annual financing target for climate initiatives at $1.3 trillion. Many states and companies announced new targets for emissions reduction and increasing the share of clean energy, supporting their words with subsidies and tax incentives.
- New Projects: Large-scale clean energy projects are being implemented everywhere. In Europe, new offshore wind farms have been constructed. In China and India, gigantic solar farms are being built, while the Middle East is launching its first hydrogen hubs based on solar and wind energy. The boom in energy storage systems continues: many countries are deploying large-scale battery complexes to smooth out the irregularity of renewable energy generation. Despite economic challenges, investors maintain a high interest in the “green” sector, anticipating long-term returns from low-carbon projects.
Coal Sector: High Demand Supports the Market, but Peak has Passed
- Asian Demand: China, India, and Southeast Asian countries remain the largest consumers of coal. In 2025, global coal consumption hovers near historical highs, driven by these regions where coal still dominates electricity generation. Developing economies are reluctant to abandon cheap coal, particularly in light of rising energy consumption, as they use it to provide baseload for their energy systems.
- Signs of Plateau: Despite high volumes of demand, coal market growth is slowing. Analysts note that global coal consumption has likely plateaued and will begin to decline in the coming years as new renewable and gas power capacities come online. In some countries, coal generation is already showing signs of decline: coal-fired power plants are still being closed in the US and Europe, while China is cutting back on plans to build new coal mines and stations in line with declared carbon neutrality goals.
- Prices: Global coal prices have stabilised after a volatile increase in 2022. The benchmark index for thermal coal (ARA, Europe) is holding around $95–100 per tonne, significantly lower than last year’s peak values. In Asia, prices have also decreased due to improved logistics and increased supply from major exporters (Australia, Indonesia, Russia). In the future, significant price surges are not expected unless there is an extremely cold winter or other force majeure events.
- Pressure from Energy Transition: The coal industry is facing increasing pressure from environmental restrictions. International banks and funds are increasingly refusing to finance coal projects, and investors are demanding companies implement emission reduction strategies. Even countries heavily reliant on coal are declaring plans to gradually reduce coal generation share by the 2030s. All this indicates that the global "coal peak" is near or has already passed, and in the long term, the role of coal will gradually decline.
Oil Products and Refineries: Diesel Demand Grows, Petrol Stagnates
- Rising Distillates: Global consumption of distillate fuels — primarily diesel and aviation — continues to increase. Global air travel has nearly recovered to pre-crisis volumes, stimulating demand for aviation fuel. Diesel remains foundational for transportation and industry: expanding logistics, agriculture, and construction in developing countries supports high demand for diesel. Refineries in many regions are increasing diesel yields to take advantage of favourable market conditions.
- Petrol: Automotive petrol consumption in developed countries has peaked and begun to decline. Improvements in fuel efficiency, increased sales of hybrid and electric vehicles, as well as environmental regulations in cities are reducing petrol demand in Europe and North America. In developing economies (Asia, Africa, Latin America), petrol usage is still rising alongside motorisation. Overall, the petrol market is in a state of stagnation, prompting refiners to adjust to new realities.
- Refining Adaptation: The oil refining sector is adapting to structural shifts in demand. New high-tech refineries in Asia and the Middle East are focusing on producing in-demand products – diesel, aviation fuel, and naphtha for petrochemicals. Simultaneously, old capacities in OECD countries are being phased out due to low margins and tightening environmental standards. In 2025, global crude processing volume slightly increased compared to the previous year, but investments are predominantly concentrated in regions with growing demand, while capital in Europe and the USA is shifting towards biofuel and petrochemical production.
Companies and Investments: Industry Consolidation and Project Diversification
- Russian Players: Energy companies in Russia are adapting to sanctions, relying on domestic resources for development. Gazprom Neft plans to issue nominal ruble bonds up to 20 billion rubles with a floating interest rate linked to the Central Bank’s key rate, aiming to secure funding under closed foreign capital markets. Rosneft is advancing its mega-project "Vostok Oil" in the Arctic, building infrastructure to develop giant fields in Taymyr; the project is expected to significantly boost oil production by the end of the decade.
- Major Strategies: Western oil and gas giants (ExxonMobil, Chevron, Shell, BP, etc.) maintain spending discipline in the face of low prices. They are focusing on projects with maximum returns and limiting capital expenditure growth, prioritising shareholder value — offering stable dividends and conducting stock buybacks. Consolidation continues: in the US, major deals have occurred over the past two years (ExxonMobil acquired shale company Pioneer Natural Resources; Chevron acquired company Hess), strengthening the positions of supermajors and their resource base.
- Middle East and New Directions: State companies in the Persian Gulf are actively investing in both traditional oil and gas sectors and new areas. Saudi Aramco, ADNOC, QatarEnergy are expanding oil and gas production, building refineries and petrochemical complexes, while simultaneously financing projects in hydrogen, carbon capture, and renewable energy. Thus, oil exporters are diversifying business models in preparation for the gradual transition of the global economy to low-carbon sources. Overall, global investments in oil and gas exploration and production showed moderate growth in 2025 compared to recent lows — reflecting cautious optimism in the industry about future hydrocarbon demand.
