Oil and Gas Industry News – Saturday, January 3, 2026: Sanction Standoff Continues; Oil Surplus Pressures Market; Stability in Gas Supply; Records in Green Energy
Current events in the fuel and energy complex (FEC) as of January 3, 2026, draw investor attention with a blend of market stability and geopolitical tension. Following a challenging previous year, the global oil market enters the new year showing signs of oversupply: Brent crude prices hover around $60 per barrel (almost 20% lower than levels a year ago), reflecting cautious sentiment and OPEC+'s efforts to maintain balance. The European gas market demonstrates relative resilience at the midpoint of winter—gas underground storage in the EU remains over 50% full, providing a buffer amid moderate demand growth during the cold. Against this backdrop, gas exchange prices remain relatively low, easing the energy cost burden for industry and consumers in Europe.
Meanwhile, the global energy transition is gaining momentum; many countries have reported new generation records from renewable sources, and investment in clean energy continues to rise. However, geopolitical factors still introduce uncertainty—the sanction standoff over Russian energy exports persists, forcing major consumers like India to reevaluate their supply routes. In Russia, authorities are extending emergency measures regulating the domestic fuel market, aiming to prevent new price spikes. Below is a detailed overview of key news and trends in the oil, gas, electricity, and raw materials sectors as of this date.
Oil Market: Oversupply and Cautious Price Corridor
Global oil prices remain relatively stable yet subdued at the start of the year. The North Sea Brent is trading around $60 per barrel, while American WTI is near $57-$58. These levels are significantly lower than last year's values, reflecting a gradual market softening following the price peaks of prior years. In 2025, OPEC+ countries partially lifted production restrictions, which, along with increased output from the U.S., Brazil, and Canada, contributed to a rise in global supply. For 2026, an oil surplus is projected—according to the International Energy Agency, production may exceed demand by nearly 4 million barrels per day. The OPEC+ participants are adopting a cautious outlook: the alliance has agreed to maintain production at current quotas in the first quarter, pausing any further increases. This approach is intended to prevent a price collapse, yet there is little scope for price growth—extensive onshore oil inventories and record volumes on tankers en route indicate market saturation.
China plays a pivotal role in shaping prices as the world's largest oil importer. Last year, Beijing actively utilized strategic buying, purchasing surplus crude when prices dropped and reducing imports when prices climbed. Thanks to this flexible approach, prices in the second half of 2025 were maintained within a narrow range of about $60–65 per barrel. By year-end, Chinese companies ramped up purchases of cheap oil again, replenishing reserves. As a result, although a formal oil surplus is developing on the market, a significant portion is currently absorbed by China, effectively setting a price floor. Nevertheless, the potential for further accumulation is not limitless—Chinese storage is already filled to hundreds of millions of barrels, and in 2026, Beijing's strategy will become a critical factor for oil prices. Investors will closely monitor whether China continues to buy excess oil, supporting demand, or slows imports, which could exacerbate price pressures.
Gas Market: Strong Reserves as Winter Continues
The gas market is exhibiting relatively favorable trends for consumers. European countries entered winter with high reserves: by early January, underground gas storage in the EU was approximately 60–65% full, slightly below record levels from a year ago but significantly above historical averages. A warm start to the winter season and energy-saving measures have allowed for reduced gas drawdowns from storage, maintaining a solid reserve for the remaining cold months. Additionally, stable liquefied natural gas (LNG) supplies continue to compensate for the near-total cessation of pipeline supply from Russia. In 2025, Europe increased its LNG imports by a quarter, mainly through increased exports from the U.S. and Qatar, launching new reception terminals. The additional LNG volumes and moderate demand keep gas prices in Europe restrained at about $9–10 per MMBtu (approximately €28–30 per MWh for the Dutch TTF hub), significantly below the peak values of the 2022 crisis.
This year, experts expect the European gas market to maintain a relatively stable situation unless extreme cold or unforeseen events occur. Even with a possible cold snap, Europe is much better prepared than two years ago: reserve stocks are high, and LNG suppliers have available capacity for rapid shipment increases. However, demand in Asia poses a risk factor—if economic growth accelerates in China or other Asia-Pacific countries, competition for LNG cargoes may increase. For now, the balance in the gas market looks secure, with prices remaining at moderate levels. This situation is favorable for European industry and energy, reducing costs and allowing for optimism regarding the remainder of the winter period.
International Politics: Sustained Sanction Pressures and Trade Restrictions
Geopolitical factors continue to significantly influence energy markets. The dialogue between Russia and the U.S., cautiously resumed last summer, has not yielded notable results by early 2026. There have been no direct agreements in the oil and gas sector, and the sanctions regime remains fully intact. Moreover, signals in Washington are increasingly pointing to the possibility of tightening restrictions. The U.S. administration links any potential easing of sanctions to progress in resolving political crises, and in the absence of such progress, is prepared to consider further measures. For instance, a 100% tariff on exports of products from China to the U.S. is under discussion, should Beijing fail to reduce its purchases of Russian oil. Such statements heighten market nervousness, although they currently remain at the level of rhetoric.
A recent incident is indicative: in late December, the U.S. detained and confiscated a batch of oil being transported on a Panama-flagged tanker, allegedly intended for China and of Iranian-Venezuelan origin. This case underscored Washington's determination to close loopholes in the sanctions regime, even to the extent of employing forceful methods at sea. At the same time, the European Union confirmed the extension of its sanctions against Russian energy exports and plans to maintain price ceilings on oil and oil products from Russia. Collectively, these factors indicate that the sanction standoff is entering a new phase with no signs of easing. The current situation compels energy resource-importing countries to seek flexible solutions—diversifying sources, using shadow tanker fleets, and transitioning to payments in national currencies—to ensure fuel supplies in the face of ongoing political pressure. Global markets, in turn, are pricing in a risk premium for these uncertainties while closely monitoring the further development of dialogue between powers.
Asia: India and China between Imports and Domestic Production
- India: Confronted with tightening Western sanctions, New Delhi is compelled to adapt flexibly to oil procurement. The sharp reduction in imports of Russian energy resources at Washington's request is considered unacceptable by the country—Russian oil and gas remain critical to meeting economic needs, accounting for more than 20% of India's crude oil imports. However, due to sanction pressures and logistical issues, Indian refineries slightly reduced purchases from Russia at the end of 2025. According to industry analysts, in December, Russian oil deliveries to India fell to ~1.2 million barrels per day—the lowest level in three years (down from record levels of ~1.8 million b/d a month earlier). To offset this decline and secure against disruptions, the largest oil refining corporation, Indian Oil, has activated an option agreement for a shipment of oil from Colombia and is exploring additional supplies from Middle Eastern and African countries. Simultaneously, India continues to negotiate preferential terms for itself: Russian suppliers are offering significant discounts (estimated at around $4-$5 off the Brent price for Urals) which help maintain the attractiveness of Russian barrels even under sanction pressure. In the long term, New Delhi is increasing investments in oil exploration and production domestically. Specifically, a large-scale program to develop deep-water oil and gas fields has been launched: state-owned ONGC is drilling ultra-deep wells in the Andaman Sea, and early results are promising. These measures aim to boost India's energy independence, although in the coming years, the country will still be heavily reliant on imports—over 85% of consumed oil is sourced internationally.
- China: The largest economy in Asia continues to balance between increasing domestic production and bolstering energy imports. Beijing has not joined the Western sanctions against Moscow and has taken advantage of the situation to increase purchases of Russian oil and gas at favorable prices. By the end of 2025, China's oil import volume again approached record levels, at around 11 million barrels per day, slightly below 2023 levels. Natural gas imports (both LNG and pipeline) also remain high, providing fuel for industry and power generation amid economic recovery. Concurrently, China is annually ramping up its own production: in 2025, domestic oil production reached a record ~215 million tons (approximately 4.3 million barrels per day, +1% year-on-year), and natural gas extraction exceeded 175 billion cubic meters (+5–6% year-on-year). The increase in domestic resources helps partially meet demand but does not eliminate the need for imports. Even with all efforts, China still imports about 70% of its consumed oil and around 40% of gas. The Chinese authorities are actively investing in the development of new fields, technologies for enhanced oil recovery, and increasing storage capacities for strategic reserves. In the long run, Beijing plans to continue growing oil reserves, creating a "safety cushion" in case of market shocks. Thus, India and China—two major Asian consumers—continue to play a crucial role in global raw material markets, balancing import strategies with the development of their own resource bases.
Energy Transition: Record Growth in Renewables and the Place of Traditional Generation
The global shift to clean energy reached new heights in 2025, and this trend is set to continue into 2026. In the European Union, total electricity generation from solar and wind power plants for the year exceeded generation from coal and gas plants for the first time. The share of green electricity in the EU energy balance is steadily growing due to the commissioning of many new capacities—after a temporary return to coal during the crisis years of 2022–2023, European countries are once again actively decommissioning coal plants while betting on renewables. In the U.S., renewable energy also set historical records: over 30% of the country's total generation now comes from renewables, and in 2025, the total volume of electricity generated from wind and solar overtook that from coal plants for the first time. China, as the global leader in installed renewable capacity, added tens of gigawatts of new solar panels and wind generators last year, further breaking its clean energy production records. Overall, companies and governments worldwide are directing unprecedented funds toward the development of low-carbon energy. According to the International Energy Agency, total investment in the global energy sector in 2025 exceeded $3 trillion, with more than half of these investments directed toward renewable projects, grid modernization, and energy storage systems.
Such rapid growth in renewable energy is changing market structures but also presenting new challenges. The primary challenge is ensuring the reliability of energy systems with a growing share of variable sources. In 2025, many countries faced the need to balance increased output from solar and wind without yet parting with traditional capacities. For instance, in Europe and the U.S., gas power plants continue to play a critical role as flexible backup power in case of peak loads or declines in renewable output. In China and India, modern coal and gas power stations are still being built alongside the expansion of renewables to meet the rapidly growing electricity demand. Thus, the global energy transition is entering a phase where new records in green generation go hand in hand with the need to modernize infrastructure and energy storage. Despite many governments' stated goals of achieving carbon neutrality by 2050–2060, traditional energy sources remain an important part of the balance in the short term, ensuring the stability of energy systems during the transition period.
Coal: Stable Demand Supports the Market
Despite the accelerated development of renewable sources, the global coal market in 2025 maintained significant volumes and remains a key component of the global energy balance. Demand for coal products is consistently high, especially in the Asia-Pacific region, where industrial growth and energy needs require extensive use of this fuel. China—the world's largest consumer and producer of coal—once again approached record levels of coal consumption last year. Annual output at Chinese mines exceeds 4 billion tons, covering the lion's share of domestic demand. However, this barely suffices to meet peak demand, especially during extremely hot summer months (when energy system load increases due to air conditioning operations). India, with its large coal reserves, is also increasing its usage; over 70% of the country's electricity is still generated at coal-fired plants, and absolute coal consumption is growing alongside the economy. Other developing Asian economies (Indonesia, Vietnam, etc.) have increased their coal extraction and exports in recent years, filling the niche freed up in the market and helping to keep global prices relatively stable.
After the price shocks of 2022, energy coal prices returned to more normal levels. In 2025, coal prices fluctuated within a narrow range, reflecting the balance between high demand in Asia and increasing supply from leading exporters. Many countries have announced plans to reduce coal usage in the future to meet climate goals; however, in the short term, this fuel remains largely irreplaceable. For billions of people worldwide, electricity from coal-fired plants currently provides basic stability in energy supply, especially where alternatives are lacking. Experts agree that over the next 5–10 years, coal generation—especially in Asia—will remain a significant component of the energy system. Only as energy storage becomes cheaper and backup capacity develops can we expect to see a noticeable decline in coal's share globally. For now, the coal market is supported by the inertia of high demand, ensuring its relative price stability even amidst the developed world's "green" push.
Russian Oil Products Market: Extension of Measures for Price Stabilization
In the early part of 2026, the internal fuel market in Russia continues to implement measures aimed at keeping prices stable and preventing shortages. Following a sharp spike in gasoline prices last summer, the situation has somewhat normalized; however, authorities have not eased control. The government has extended the existing ban on the export of automotive gasoline and diesel fuel until the end of February 2026 to preserve additional resource volumes for domestic consumers during the winter months. It should be noted that a full embargo on fuel exports was first introduced in the autumn of 2025 amid the crisis in the trading market and has since been extended several times. Concurrently, from January 1, excise taxes on gasoline and diesel have increased (by 5.1%), slightly raising the tax burden on the industry; however, the damping mechanism and direct subsidies to oil refiners remain in place. These subsidies compensate companies for lost revenue and encourage them to direct sufficient volumes of production to the domestic market, keeping wholesale prices in check.
- Export Control: The complete ban on the export of gasoline and diesel fuel from Russia has been extended until February 28, 2026. This measure should effectively increase the supply of fuel in the domestic market by at least 200,000–300,000 tons per month that were previously exported.
- Financial Support: The damping mechanism and subsidies for oil companies have been retained, allowing partial compensation for the difference between domestic and external prices. This ensures that refineries have an economic incentive to prioritize fuel deliveries at gas stations within the country, while retail price increases remain moderate.
- Monitoring and Response: Relevant agencies (Ministry of Energy, FAS, etc.) are continuously monitoring the situation with fuel production and supplies. Oversight of oil refineries and gasoline distribution across regions has been strengthened. Should any local disruptions arise, authorities are prepared to promptly deploy reserves or impose new restrictions to prevent shortages. This was recently confirmed by an incident at the Ilsky oil refinery in the Krasnodar region: after infrastructure damage from drone debris, emergency services quickly extinguished the fire, preventing market impact.
The combination of these measures has already yielded results: wholesale exchange prices for fuel have moved away from peak values, gas stations across the country are adequately supplied, and retail price increases over the past year have totaled only a few percent, close to inflation levels. Authorities intend to continue acting proactively, especially during the sowing and harvesting campaigns of 2026 when fuel demand seasonally rises. The situation in the Russian oil products market is under constant government monitoring—any signs of a new price spike will be met with additional interventions. These efforts aim to ensure uninterrupted fuel supply to the economy and population at reasonable prices, despite external challenges and global oil market volatility.
