Oil and Gas News and Energy for Tuesday, February 3, 2026: Extreme Storms, Easing Sanctions, and Oil and Gas Market Balance
The global fuel and energy sector is facing significant challenges due to extreme winter cold and ongoing geopolitical tensions. Investors and market participants are closely monitoring the situation as they assess the impact of weather catastrophes, sanction policies, and the transition to cleaner energy on the oil and gas industry and the power sector.
- Extreme winter storms in the U.S. temporarily halted up to 15% of oil production and significantly reduced gas output; recovery efforts are underway.
- Oil prices (Brent ~ $65/barrel) remain stable; OPEC+ has signaled its intention to maintain current production restrictions.
- The escalation of the U.S.-Iran conflict poses a supply disruption threat, despite ongoing peace talks regarding Ukraine.
- Natural gas prices in North America and Europe have surged amid freezing temperatures; gas storage levels in the EU have plummeted to their lowest in years.
- Economic recovery in Asia, particularly in China, supports global energy resource demand, intensifying competition for oil and LNG.
- Renewable energy sources reached a record share of Europe’s electricity generation, but weak infrastructure and harsh winter conditions have highlighted the need for backup capacity.
- The U.S. is easing sanctions against Venezuela following a change in leadership, paving the way for increased heavy oil exports to the global market.
Oil: Recovery from the Storm and Price Stability
In the U.S., a powerful winter storm led to a temporary shutdown of production of up to 2 million barrels per day (around 15% of national output). The Permian Basin felt the brunt of the storm's effects, but production began to recover within a few days. After a spike earlier in the week, oil prices stabilized: Brent is holding around $65 per barrel, while WTI is near $60. Despite brief disruptions, both benchmark grades enjoyed a weekly increase of approximately 2-3%.
The extreme cold also impacted oil refining. Several major U.S. refineries scaled back operations due to equipment icing, which caused a spike in product prices—particularly diesel and heating oil. However, a significant fuel shortage was averted thanks to reserves and the timely resumption of refinery operations as temperatures began to rise.
Meanwhile, global oil supply is returning to previous levels. In Kazakhstan, production resumed at one of the largest fields following the repair of an export pipeline, increasing the supply of Caspian oil. As OPEC+ approaches its next meeting, member countries reaffirm their commitment to current quotas and do not plan to increase production in March. Thus, despite natural disruptions, the global oil market remains relatively balanced.
Geopolitical Risks: Iran, Sanctions, and Negotiations
Geopolitical tensions fuel uncertainty in the energy market. The conflict between the U.S. and Iran has escalated; President Donald Trump announced the deployment of a carrier "armada" to Iran's shores and threatened measures in response to the suppression of protests and Tehran's nuclear ambitions. Iran has vowed to consider any attack as “total war.” Such rhetoric adds a risk premium to oil prices, as traders fear disruptions in supply from the Middle East.
Concurrently, there is cautious optimism surrounding ongoing negotiations between Russia, Ukraine, and the U.S. If successful, these talks could lead to a gradual easing of Western sanctions against the Russian oil and gas sector, altering the configuration of global energy flows. For now, however, the sanctions regime remains stringent: the export of Russian oil and gas is limited by price caps and is primarily reoriented towards Asia. Investors continue to evaluate geopolitical risks, keeping a close eye on Middle Eastern events and potential shifts in sanction policies.
Natural Gas: Freezing Temperatures and Price Surge
The natural gas market has come under pressure from extreme cold. In the U.S., widespread freezing of wells occurred due to the winter storm: up to 16% of gas production was temporarily halted—more than during the 2021 crisis. Daily gas output fell from around 110 billion cubic feet (3.1 billion cubic meters) to approximately 97 billion cubic feet (2.7 billion cubic meters), triggering a sharp price spike. Henry Hub futures soared more than double, exceeding $6 per million British thermal units (MMBtu), equivalent to about $210 per thousand cubic meters. As the cold eased, prices retreated somewhat; however, the situation remains highly volatile and weather-dependent.
Europe also faced a gas shortage. By mid-winter, European storage facilities were below 50% of capacity (a minimum for recent years), as prolonged freezing temperatures sharply increased gas withdrawals. Spot prices in the EU surged to approximately $14 per MMBtu (around $500 per thousand cubic meters), marking a several-month high. The supply factor played a significant role: U.S. LNG exports temporarily decreased by nearly half due to issues at export terminals, limiting gas inflows to Europe and further driving up prices. Some LNG cargoes were redirected to the U.S. domestic market for higher returns, exacerbating issues in the global market.
In the coming weeks, the dynamics of gas prices in Europe will primarily depend on the weather. A milder February would provide the market with some relief, although gas inventories are expected to remain significantly below normal by the end of winter. European governments and companies will need to actively replenish depleted storage in the interseason, competing for LNG in the global market. Analysts warn that a new cold wave or supply delays could trigger another price surge, as the global gas market has become more interconnected and sensitive to local disruptions.
Electricity and Coal: Strain on the Grids
Energy systems in the Northern Hemisphere are operating under increased strain. In the U.S., the operator of the largest eastern power grid (PJM) declared a state of emergency: daily consumption peaks surpassed 140 GW, raising the threat of rolling blackouts. To maintain balance, authorities had to deploy backup diesel generators and oil-fired power plants until the end of January. This helped avoid a blackout but required burning more fuel oil and coal instead of natural gas. Amid the Arctic cold, generation from wind and solar stations sharply declined, necessitating maximum utilization of traditional hydrocarbon capacities to cover demand.
A similar situation is observed in Europe: electricity demand grew, prompting several countries to temporarily return coal-fired power plants to operation to cope with peaks. Although, as of the end of 2025, coal’s share in the EU's electricity generation fell to a record low of 9.2%, its use has locally increased during this winter. Concurrently, infrastructure limitations have emerged: the insufficient capacity of the grids forces the restriction of wind generation output during peak production times, resulting in missed opportunities for cheap energy and price increases at other times. Experts are calling for accelerated modernization of power grids and the implementation of energy storage systems to enhance the resilience of energy systems and decrease coal dependency in emergencies.
Growth of Renewables and Energy Transition
The transition to clean energy continues at an accelerated pace. In 2025, EU countries produced more electricity from wind and solar (30% of generation) than from all fossil sources combined (29%). Overall, low-carbon sources (renewables and nuclear generation) accounted for 71% of electricity generation in the EU. Record levels were aided by the commissioning of new capacities: total installed solar power capacity increased by 19% over the year. In several countries (Spain, Netherlands, Hungary, etc.), solar energy now accounts for more than one-fifth of national consumption.
Despite these successes, Europe faces challenges related to high energy costs and infrastructure bottlenecks. Price increases in 2025 coincided with periods of peak usage of gas-fired power plants and forced outages of some wind farms due to grid overloads. To reduce costs and ensure stable integration of renewables, investments are needed to expand power grids and energy storage systems. At the political level, certain governments (such as Germany and the Czech Republic) have achieved the easing of some EU climate measures, while Brussels simultaneously negotiated a deal with Washington for additional volumes of American energy resources. This has sparked discussions about balancing ecological goals with energy security.
The trend of developing clean energy is also strengthening on a global scale. In China and India, record volumes of solar and wind power plants were commissioned in 2025, enabling these countries to slightly reduce carbon emissions in the power sector for the first time in over half a century, despite rising overall consumption. Further investment in "green" projects is expected worldwide in 2026. Nevertheless, the recent crisis confirmed that oil, gas, and coal remain indispensable for meeting peak demand and emergency situations. In the coming years, countries face the challenge of balancing the accelerated development of renewables with maintaining adequate backup capacities based on fossil fuels.
Venezuela: Returning to the Oil Market
A significant development has been the easing of the sanctions regime against Venezuela. In January, following a change in leadership in Caracas, Washington announced plans to lift some restrictions imposed in 2019 to increase oil supply to the global market. A general license is expected to be issued, allowing foreign companies to expand operations in the Venezuelan oil and gas sector. This license will be awarded to partners of the state-owned PDVSA—Chevron, Repsol, Eni, Reliance, and others—who have already submitted applications to increase production and exports.
Experts predict that Venezuela's oil exports will begin to rise rapidly. By the end of 2025, sanctions had reduced shipments to 500,000 barrels per day (down from 950,000 barrels per day in November), but in 2026, they could exceed 1 million barrels per day. The U.S. has already agreed with Caracas on a $2 billion deal to replenish its strategic reserve and is discussing an investment plan of around $100 billion to restore Venezuela's oil sector—from fields to refineries and power grids.
The first tankers carrying Venezuelan oil have already arrived at U.S. ports under special permits, partially relieving PDVSA's storage facilities. Refineries on the U.S. Gulf Coast, designed for heavy Venezuelan crude, are preparing to resume the processing of this feedstock. Additional volumes from Venezuela could adjust the balance in the OPEC+ market; however, recovery of production is expected to take time due to the country's dilapidated infrastructure.
Market Expectations and Conclusions
Despite numerous upheavals, the global energy market enters February 2026 without signs of panic, albeit in a state of heightened readiness. Short-term factors—weather and politics—support price volatility for oil and gas, but the systemic balance of supply and demand remains intact for now. OPEC+ is ensuring that the oil market does not slide into deficit, and the swift recovery of production and international supplies is mitigating localized disruptions. Strong demand in Asia (especially in China and India) also helps maintain market balance. Unless new emergencies arise, oil prices are likely to remain near current levels (around $60–65 per barrel of Brent) until the next OPEC+ summit.
In the gas market, much will depend on the weather: a mild end to winter could permit further price declines, while a new cold front could again push prices higher. Europe will need to replenish its depleted gas stocks before the next winter. Competition with Asia for LNG is likely to continue to be a factor contributing to high price levels. Investors are also closely watching political developments: any changes regarding Iran and Venezuela or breakthroughs in the Ukraine conflict could significantly shift market sentiment.
In the long term, the energy transition remains crucial; however, recent events have underscored the critical importance of reliable traditional capacities. Companies and governments must seek to balance investments in renewable energy with the provision of adequate reserves based on fossil fuels. A key challenge in 2026 will be achieving this balance—maintaining energy security while simultaneously advancing climate goals.
