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Five energy market trends in 2026: Bousso

The energy markets are in a depressed mood for 2026, as geopolitical uncertainties cloud the outlook. In addition, signs of a growing oil and gas supply threaten to lower prices.

The oil and gas industry had a crazy year in 2018. Highlights included the 12-day Israel/Iran conflict in June, the trade wars of Donald Trump, the intensified targeting by Russia of energy infrastructure as part of its war on Ukraine, OPEC’s sometimes perplexing decisions regarding production, and the recent threatened U.S. ban of Venezuela.

What's next for the upcoming year? Here are five energy trends that will likely shape the landscape by 2026.

The Year of the Glut?

Fears of a significant oversupply caused crude oil prices to fall nearly 20% by 2025, from $60 per barrel to around $60.

The global oil production has risen over the last year. The U.S., the world's largest oil producer, increased production as did Canada, Brazil and the Organization of the Petroleum Exporting Countries, including Russia.

According to the International Energy Agency, supply is expected to exceed demand by 3.85 million barrels a day (bpd) in 2026. This is equivalent to around 4% global demand.

OPEC analysts, however, see a largely balancing market in the coming year. This is one of sharpest forecast differences seen in decades. China's massive crude stockpiling has exacerbated the uncertainty about supply-demand. These volumes are not well known by traders, but they are believed to be large, at around 500,000 bpd.

The IEA is more likely to prove correct in the end. Kpler data shows that oil transported or stored on tankers reached its highest level in the last few weeks since April 2020 when consumption plummeted due to COVID-19 locksdowns. These elevated seaborne inventories suggest that onshore stocks may start to fill soon, adding further downwards pressure on prices.

The LNG Wave is coming

The demand for liquefied gas has increased in recent years. This is because Europe wants to replace the large volumes of Russian pipeline natural gas that it imported prior to Moscow's invasion in Ukraine in 2022.

As global export capacity increases, the boom may no longer be as profitable for LNG producers and traders.

According to the IEA's estimates, between?2025- 2030, the new LNG export capability is expected to increase by 300 billion cubic meters per year. This represents a 50% increase, and around 45% of this capacity will come from the U.S.

Over the next few years, supply is expected to exceed demand growth. This will squeeze margins for producers and offer some relief to consumers in Europe and Asia. The rising price of natural gas in the United States is another problem for producers.

Still, there are some reasons for optimism among producers. LNG prices will continue to fall in 2026, and beyond. This power source, which is more competitive than other fuels like oil and coal as they become cheaper, could boost demand.

DIESEL PERFORMANCE CONTINUES

The diesel profit margins rose this year. They gained momentum in the last half-year as the refined product market was faced with supply constraints, even though the world was increasingly awash in crude oil.

According to LSEG, the benchmark European diesel refining profit margins increased 30% in 2025 compared to a 20% decline in Brent crude in 2025. This is largely because of a series of Ukrainian drone strikes on Russian refineries, oil terminals and other oil facilities, which resulted in a drop in diesel exports by late 2025.

The trend is expected continue until 2026 as there are relatively few new refinery capacities coming on line. The calculus would be altered if there was a peace agreement in Ukraine, but it is likely to offer only limited relief.

BIG OIL EXPECTS BRIGHTER FURTURE Oil and Gas companies are preparing for strong headwinds by 2026. Chevron, TotalEnergies and Exxon Mobil have all announced cost reductions of around 10% for the next year. The oil majors are also quite optimistic about the long-term prospects. The oil majors are investing more in exploration and new projects that will be online in this decade or early 2030s. Saudi Arabia, the United Arab Emirates and other major Middle East oil producers are also preparing for a new upstream investment era.

The long-term bullishness could lead Western oil majors – most of whom have solid balance sheets with?relatively little debt, BP being the notable exception – to take advantage of the anticipated 2026 downturn in order to buy up struggling competitors.

RENEWABLES Down But Not Out

The IEA lowered its forecast of renewable?power through 2030 in October by a fifth, or 248 Gigawatts. This was due to weaker prospects for the U.S. Solar is expected to account for 80% of this increase in global renewable capacity by 2030.

However, the demand for electricity will still grow by 4% annually by 2027. This is due to the power-hungry data centers and the electrification in general of economies.

The world's energy markets will be dominated by this tension in 2026, especially as solar, wind, and battery storage costs are expected to continue to fall.

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(source: Reuters)