Oil and Gas News and Energy — Saturday, January 17, 2026: Tightening Sanctions, Oil Surplus, and Diversification of Gas Supplies. Oil, gas, electricity, renewables, coal, refineries — key trends in the energy sector for investors and market participants.
At the beginning of 2026, the fuel and energy complex is grappling with the ongoing geopolitical standoff and a massive restructuring of global energy resource flows. Western countries are intensifying sanctions on Russia — the European Union has introduced new restrictions on energy trade. Meanwhile, the global oil market is witnessing an oversupply: slowing demand and the return of certain producers (for example, Venezuela) are keeping the price of Brent crude around $60 per barrel. The European gas market is undergoing historic changes: as of January, gas supplies from Russia have practically ceased; however, high levels in EU underground gas storage and diversification of sources (from LNG to Azerbaijani gas) currently ensure price stability this winter. The transition to clean energy is gaining momentum: 2025 marked a record capacity addition in renewable energy, although a reliance on traditional resources remains necessary for the reliable operation of energy systems, while demand for coal and hydrocarbons in Asia remains high, supporting the global commodity market. In Russia, following last year's spike in gasoline prices, the authorities have extended emergency restrictions on the export of petroleum products in a bid to maintain stability in the domestic fuel market.
Oil Market: Global Surplus Keeps Prices in Check
Global oil prices at the beginning of 2026 remain relatively stable, trading within a moderate range. The benchmark Brent is priced around $60–65 per barrel, while U.S. WTI is in the $55–60 range. The market is experiencing a supply surplus of about 2.5 million barrels per day. This is due to OPEC+ countries increasing production in the second half of 2025, aiming to regain lost market shares. Furthermore, oil production in the U.S. remains high, and the partial return of Venezuelan volumes to the market after the easing of sanctions has heightened supply.
Demand for oil is growing at a slower pace. The slowdown of the Chinese economy and energy-saving measures following a period of high prices in previous years are limiting global consumption growth. Against this backdrop, analysts predict that oil prices could drop to $55 per barrel in 2026, at least in the first half of the year, unless producers intervene. A key factor is OPEC+ policy: if the alliance continues to increase supply or delays new production cuts, 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 have not yet led to supply disruptions.
Gas Market: Europe Seeks Alternatives to Russian Gas
The European gas market enters 2026 with a new reality: a near-complete cessation of pipeline gas imports from Russia. Following an EU decision, imports have been prohibited since January 1, cutting off around 17% of previous imports to Europe. EU countries preemptively filled underground gas storage to over 90%. Despite winter conditions, gas extraction from storage is proceeding in a controlled manner, without sharp price spikes. Exchange prices for gas in Europe remain significantly below the peaks of 2022, reflecting relative market equilibrium.
To offset the lost volumes of Russian gas, the European Union is focusing on several directions:
- maximizing pipeline supplies from Norway and North Africa;
- increasing LNG imports from the U.S., 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 smoothly, despite the cessation of supplies from Russia. At the same time, Russia is redirecting its gas exports to the East: Gazprom reported a new record daily supply to China via the Power of Siberia gas pipeline in early January.
International Politics: Sanctions and Energy
The sanctions standoff between Moscow and the West continues to escalate. At the end of 2025, the EU approved the 19th package of measures, a significant part of which targets the energy sector. Among these is a reduction of the price cap on Russian oil set to take effect in February 2026, as well as a decision to ban the import of Russian LNG entirely by 2027. In response, Moscow extended its own embargo on oil sales to participants of the price cap until June 30, 2026.
Russian exports of oil and petroleum products are still holding at a relatively high level thanks to the redirection of flows to Asia, where China, India, Turkey, and other countries purchase raw materials at a significant discount. As a result, the global energy market has effectively split into two parallel contours — the Western (sanctioned) and alternative, where Russian hydrocarbons continue to find demand albeit at lower prices. Investors and market participants are closely monitoring the sanctions narrative, as any changes impact logistics and the pricing landscape of raw materials markets.
Energy Transition: Records and Balance
The global transition to clean energy in 2025 was marked by unprecedented growth in renewable generation. Many countries introduced record capacities of solar and wind power plants. The EU added around 85–90 GW of new renewable energy in a year, the share of renewable electricity in the U.S. surpassed 30%, and China commissioned tens of gigawatts of "green" power plants, breaking its own records.
The rapid increase in renewables raises questions about the reliability of energy systems. In periods of calm weather or lack of sunlight, traditional power plants' backup capacity is still needed to meet peak demand and prevent outages. Therefore, large-scale battery plants are being developed globally, along with research into storage technologies such as hydrogen and other energy carriers.
The experience of BP, which decided to cut investments in renewables and write off several billion dollars of "green" assets, underscored that even oil and gas giants must balance between environmental goals and profitability. Despite the vigorous growth of the renewable sector, traditional oil and gas businesses still deliver the main profits. Investors demand a cautious approach: "green" projects need to be developed without compromising financial stability. The energy transition continues, but the lesson from 2025 is the need for a more balanced strategy that combines accelerated deployment of renewables with maintaining energy system reliability and investment returns.
Coal: High Demand in Asia
The global coal market in 2025 remained on the rise, despite global objectives to reduce coal usage. The primary reason is consistently high demand in Asia. Countries like China and India continue to burn vast amounts of coal for electricity generation and industrial needs, offsetting declines in consumption in Western economies.
China accounts for nearly half of global coal consumption, and despite producing over 4 billion tons annually, it is forced to increase imports during peak periods. India is also ramping up production, but due to rapid economic growth, it needs to import significant volumes of fuel, primarily from Indonesia, Australia, and Russia.
High Asian demand keeps coal prices relatively elevated. Major exporters — from Indonesia and Australia to South Africa — have increased revenue due to stable orders from China, India, and other countries. In Europe, after a temporary spike in coal use in 2022–2023, its share is decreasing again due to the development of renewables and the resumption of nuclear power generation. Overall, despite climate agendas, coal will maintain a significant portion of the global energy balance in the coming years, even as investments in new coal capacities gradually decline.
Russian Market: Restrictions and Stabilization
The Russian government has manually controlled fuel price growth since the autumn of 2025. Following record wholesale prices for gasoline and diesel in August, a temporary export ban on major petroleum products was implemented, extended until February 28, 2026. Restrictions apply to the export of gasoline, diesel fuel, fuel oil, and gas oils, and have already proven effective: wholesale prices 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 stabilized — gas stations are well-supplied with fuel, and panic buying has subsided.
For oil companies and refineries, these measures mean lost profits, but the authorities are demanding that businesses "tighten their belts" for market stability. The cost of oil production at most Russian fields is low; therefore, even a price of Russian crude below $40 is not critical to profitability. However, reduced export revenues threaten the launch of new projects that require higher global prices and access to foreign markets.
The government refrains from direct compensation for the industry, asserting that the situation is under control and that energy sector companies are still making profits even with reduced exports. The domestic fuel and energy sector is adapting to new conditions. The main task for 2026 is to maintain a balance between controlling domestic energy prices and supporting export revenues that are vital for the budget and industry development.
