**London, UK –** The global energy landscape is currently a complex tapestry woven with threads of geopolitical manoeuvre, evolving economic pressures, and persistent demand for fossil fuels. In early trading on Monday, West Texas Intermediate (WTI) crude oil experienced a notable surge, reaching approximately $57.65 per barrel. This uptick is largely attributed to heightened supply uncertainty stemming from the US administration's increasingly stringent blockade on Venezuela's oil exports. The US has reportedly intercepted at least one Venezuelan oil tanker and is pursuing another, signalling a determined effort to curtail the Maduro government's access to vital revenue streams. June Goh, a senior oil market analyst at Sparta Commodities, commented on the situation, stating, "The market is waking up to the fact that the Trump administration is taking a hardline approach to the Venezuelan oil trade."
This aggressive stance on Venezuelan oil, coupled with anticipation surrounding the American Petroleum Institute's forthcoming crude oil stockpiles report due on Tuesday, is contributing to market volatility. Simultaneously, the Federal Reserve's recent pattern of interest rate reductions, observed in its last three meetings, is fostering expectations for further monetary easing in January. This potential weakening of the US dollar could, in turn, bolster the prices of USD-denominated commodities like oil.
Beyond the immediate price fluctuations, a more profound narrative is unfolding regarding the world's energy trajectory. Despite significant investments in renewable energy sources and the growth of their capacity, global fossil fuel consumption continues its upward trajectory. This phenomenon has led to the characterisation of the current era as one of "energy addition" rather than a definitive transition away from hydrocarbons. The United Nations has highlighted the inadequacy of new national climate plans presented at COP30, suggesting they fall short of meaningfully impacting projected global temperature targets. Announced climate goals for 2035 are also being criticised for a perceived lack of ambition, indicating a disconnect between stated environmental aspirations and tangible policy implementation.
Economic realities are further complicating the push for decarbonisation, particularly in Europe. The European Union has committed to phasing out all Russian natural gas imports by the end of 2027, a move necessitated by geopolitical pressures. However, the abundance of new liquefied natural gas (LNG) project approvals, with a surge observed in 2025 and approximately 300 billion cubic meters of new annual export capacity slated for operation by 2030, is driving down natural gas prices. European wholesale gas prices have dipped below $10 per million British thermal units (mmBTU) for the first time in mid-2024, a level not seen since April 2021, and are forecast to fall further next year. This price compression, narrowing the spread between US and European gas markets, could diminish the profitability of US LNG exports and potentially lead to a structural decline in EU LNG demand as cheaper alternatives emerge.
In Canada, a rollback of climate regulations is being implemented with the explicit aim of stimulating investment in energy production, underscoring the pragmatic approach taken by some nations to address energy security and economic growth. Meanwhile, OPEC+ has opted to maintain its current output levels, a decision aimed at influencing market supply dynamics amidst robust demand forecasts. Global oil consumption is projected to remain above 100 million barrels per day well into 2050.
US shale companies, while facing downward revisions in overall production forecasts, are seeing improved efficiency through advancements in drilling technology. Chevron CEO Mike Wirth expressed confidence in their ability to extract remaining resources, stating, "we know where the oil is. We left 90% of it behind. It would be the first time in history that we didn’t figure out how to recover it." Saudi Arabia has also commenced production at its Jafurah gas field, with ambitious targets for output by 2030.
Looking ahead, the confluence of these factors suggests a challenging path for global climate targets. The continued reliance on fossil fuels, coupled with geopolitical instability and economic considerations, points towards a future where oil prices could see a resurgence. A Reuters poll anticipates a potential improvement in global demand by 2026, while Goldman Sachs forecasts a rise in WTI prices next year. Projections suggest that structural realities could drive oil prices to $75-80 per barrel by 2028, potentially sparking the necessary investment to rebalance the market in the early 2030s. This scenario implies a continued concentration of global oil power among a select group of major producers, with the world navigating a complex energy paradigm for the foreseeable future.