Oil and Gas and Energy News for Tuesday, February 3, 2026: Extreme Storm, Easing Sanctions, and Oil and Gas Market Balance
The global fuel and energy sector is facing serious challenges due to extreme winter cold and ongoing geopolitical tensions. Investors and market participants are closely monitoring the situation, assessing the impact of weather disasters, sanction policies, and the transition to renewable energy on the oil and gas industry and the electricity sector.
- An extreme winter storm in the USA 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+ signals commitment to current production restrictions.
- The escalating US-Iran conflict poses a threat to supply disruptions, despite ongoing peace negotiations concerning Ukraine.
- Natural gas prices in North America and Europe surged amid frigid temperatures; EU gas stocks have dropped to their lowest levels in recent years.
- Economic recovery in Asia, particularly in China, supports global demand for energy resources, intensifying competition for oil and LNG.
- Renewable energy sources achieved a record share in Europe's electricity generation; however, poor infrastructure and severe winter conditions have highlighted the need for reserve capacities.
- The US eases sanctions against Venezuela following a power transition, paving the way for increased heavy oil exports to the global market.
Oil: Recovery from Storm and Price Stability
In the US, a powerful winter storm caused a temporary shutdown of up to 2 million barrels per day (approximately 15% of nationwide production). The hardest hit area was the Permian Basin, but production began to rebound a few days later. Following a spike at the beginning of the week, oil prices stabilized: Brent hovers around $65 per barrel, while WTI is near $60. Despite temporary disruptions, both benchmarks maintained a weekly growth of about 2-3%.
Extreme cold conditions also affected oil refining. Several major US refineries reduced operations due to equipment freezing, leading to a spike in prices for petroleum products, especially diesel fuel and heating oil. However, a serious fuel shortage was averted thanks to reserves and the prompt resumption of operations as temperatures rose.
Meanwhile, global oil supply is returning to previous levels. In Kazakhstan, oil production at one of the largest fields resumed following repairs to an export pipeline, increasing supplies of Caspian oil. OPEC+ countries, ahead of their next meeting, reaffirm their commitment to current quotas and do not plan to increase production in March. Thus, despite natural upheavals, the global oil market remains relatively balanced.
Geopolitical Risks: Iran, Sanctions, and Negotiations
Geopolitical tensions are fueling uncertainty in the energy market. The US-Iran conflict has escalated: President Donald Trump announced the deployment of an aircraft carrier "armada" to the shores of Iran and threatened measures in response to the suppression of protests and Tehran's nuclear ambitions. Iran, in turn, has promised to consider any attack as a "total war." Such rhetoric adds a risk premium to oil prices, as traders fear supply disruptions from the Middle East.
At the same time, cautious optimism surrounds the ongoing negotiations between Russia, Ukraine, and the US. If successful, this dialogue could lead to a gradual easing of Western sanctions against the Russian oil and gas sector, changing the configuration of global energy flows. For now, however, the sanctions regime remains stringent: Russian oil and gas exports are constrained by price caps and are primarily redirected to Asia. Investors continue to assess geopolitical risks, keeping a keen eye on both Middle Eastern events and potential shifts in sanction policies.
Natural Gas: Frost and Price Surge
The natural gas market has been hit hard by extreme cold temperatures. In the US, massive freeze-offs occurred due to the winter storm, temporarily halting up to 16% of gas production—more than during the 2021 crisis. Daily gas output fell from approximately 110 to 97 billion cubic feet, resulting in a sharp rise in prices. Henry Hub futures skyrocketed more than twofold, exceeding $6 per million British thermal units (MMBtu), or about $210 per thousand cubic meters. With the easing of cold temperatures, prices retreated, but the situation remains extremely volatile and weather-dependent.
Europe also faced gas shortages. By mid-winter, European storage facilities were less than 50% full (a minimum in recent years) as prolonged cold increased gas withdrawals sharply. Spot prices in the EU spiked to around $14 per MMBtu (approximately $500 per thousand cubic meters), the highest in recent months. A significant supply factor was at play: LNG exports from the US temporarily decreased by nearly half due to issues at export terminals, limiting gas influx into Europe and driving prices higher. Some LNG cargoes were redirected to the US domestic market for higher revenue, exacerbating the situation in the global market.
In the coming weeks, gas price dynamics in Europe will largely depend on weather conditions. If February proves relatively mild, the market could receive some relief; however, gas stocks will still end the winter significantly below average. EU governments and companies will need to actively replenish depleted storage during the inter-season, competing for LNG on the global market. Analysts warn that a new wave of cold weather or supply delays could trigger another price spike, as the global gas market has become more interconnected and sensitive to localized disruptions.
Electricity and Coal: Strain on Grids
Energy systems in the Northern Hemisphere are operating under increased load. In the US, the operator of the largest eastern power grid (PJM) declared an emergency: daily peak demand exceeded 140 GW, raising the threat of rolling blackouts. To maintain balance, authorities resorted to using backup diesel generators and oil-fired power plants until the end of January. This helped avoid a blackout but required burning more oil and coal instead of natural gas. Amid the Arctic cold, generation from wind and solar stations dropped sharply, so traditional hydrocarbon capacities had to be maximally loaded to meet demand.
In Europe, a similar trend is observed: electricity demand rose, prompting several countries to temporarily bring coal-fired power plants back online to weather the peak loads. Although coal accounted for a record-low 9.2% of EU electricity generation by the end of 2025, its local usage increased this winter. Concurrently, infrastructure limitations became apparent: inadequate grid capacity forced restrictions on wind generation output during peak production, resulting in missed opportunities for cheaper energy and higher prices at other times. Experts are urging accelerated upgrades of power grids and implementation of energy storage systems to boost grid resilience and reduce reliance on coal during emergencies.
Renewable Energy Growth and Energy Transition
The transition to clean energy continues to accelerate. In 2025, EU countries generated more electricity from wind and solar (30% of generation) than from all fossil sources combined (29%). Overall, low-carbon sources (renewables and nuclear) accounted for 71% of electricity production in the EU. Record levels were supported by new capacity additions: the combined installed capacity of solar parks grew by 19% over the year. In several countries (Spain, the Netherlands, Hungary, etc.), solar energy now covers over one-fifth of national consumption.
Despite these successes, Europe faces high energy costs and infrastructure bottlenecks. The price rise in 2025 coincided with periods of peak usage of gas-fired power plants and forced shutdowns of some wind farms due to grid overloads. To reduce prices and ensure stable integration of renewables, investments in expanding power grids and energy storage systems are required. On the political front, some governments (e.g., Germany and the Czech Republic) have achieved a relaxation of certain EU climate measures, while Brussels has concurrently struck a deal with Washington to procure additional volumes of American energy resources. This has sparked discussions on balancing environmental goals with energy security.
The trend toward clean energy development is also strengthening globally. In China and India, record amounts of solar and wind power plants were commissioned in 2025, allowing these countries to slightly reduce carbon emissions in the electricity sector for the first time in over half a century, despite rising overall consumption. In 2026, further investments in "green" projects are expected worldwide. Nonetheless, recent crises have confirmed that oil, gas, and coal remain indispensable for meeting peak demand and emergency situations. In the coming years, countries will face the challenge of combining accelerated renewable development with ensuring sufficient backup capacities based on fossil fuels.
Venezuela: Return to the Oil Market
A significant development has been the easing of the sanctions regime against Venezuela. In January, following a power transition in Caracas, Washington announced plans to lift some restrictions from 2019 to increase oil supply in the global market. A general license is expected to be issued, allowing foreign companies to expand their activities in Venezuela's oil and gas sector. Recipients will include partners of the state-owned PDVSA—Chevron, Repsol, Eni, Reliance, and others—which have already applied to ramp up production and exports.
Experts predict that Venezuelan oil exports will begin to rise rapidly. By the end of 2025, due to sanctions, exports had fallen to 500,000 barrels per day (down from 950,000 barrels per day in November), but in 2026, they may exceed 1 million barrels per day. The US has already agreed with Caracas on the first deal worth $2 billion to replenish its strategic reserve and is also discussing an investment plan of about $100 billion aimed at restoring Venezuela's oil industry—from fields to refineries and power grids.
The first tankers carrying Venezuelan oil have already arrived at US ports under special permits, allowing for partial relief of PDVSA's storage facilities. Refineries on the US Gulf Coast, designed for heavy Venezuelan oil, are preparing to resume processing this crude. Additional volumes from Venezuela could adjust the balance in the OPEC+ market; however, recovery efforts may take time due to the country's aging infrastructure.
Market Expectations and Conclusions
Despite all the upheavals, the global energy market enters early February 2026 without signs of panic, though in a state of heightened readiness. Short-term factors—weather and politics—support price volatility in oil and gas, but the systemic balance of supply and demand has not been disrupted. OPEC+ is preventing the oil market from slipping into deficit, and the rapid recovery of production and international supplies is mitigating local disruptions. Strong demand in Asia (particularly in China and India) also helps maintain balance in the market. If no new emergency events occur, oil prices are likely to remain near current levels (around $60-$65 per barrel Brent) until the next OPEC+ summit.
In the gas market, much will depend on the weather: a mild end to winter could lead to further price declines, whereas a new cold front might once again drive up quotes. Europe will need to replenish its depleted gas supplies ahead of next winter. Competition with Asia for LNG is likely to remain a factor of high pricing levels. Investors are also monitoring political developments: any changes regarding Iran and Venezuela or breakthroughs in the Ukraine war could significantly alter market sentiment.
In the long term, the energy transition remains relevant; however, recent events have underscored the critical importance of reliable traditional capacities. Companies and governments must seek a balance between investing in renewable energy and ensuring sufficient reserves based on fossil fuels. In 2026, achieving this balance will be paramount—maintaining energy security while advancing climate goals.
