Energy market analysis April 23, 2025

“Overall, the market seems to be in a wait-and-see mode.” – Ole Hansen, Head of Commodity Strategy Saxo Bank

OPEC has updated its forecast for global oil demand growth for 2025 downward due to escalating trade tensions and weaker economic indicators. This reports Reuters and OilPrice.com, among others. The cartel now anticipates demand growth of 1.3 million barrels per day (bpd) for 2025, 150,00 bpd below its previous forecast. The forecast for 2026 has also been revised downward by 1.28 million bpd.

OPEC report shows Trump’s import tariff war has dampened economic activity. This leads to a more cautious outlook for oil consumption. The organization also updated its global economic growth forecast. A 3% expansion is forecast for 2025, an adjustment from the previous 3.1%. In mid-April, eight OPEC+ countries announced plans to phase out voluntary restrictions on their oil production by increasing output by 411,000 barrels per day in May. Thus, several Middle Eastern oil countries, including Kazakhstan, the United Arab Emirates and Iraq, are signaling their intention to abandon their long-standing role as OPEC’s swing producer in an effort to take a tougher stance against countries that continue to violate the production pact.

The adjusted forecasts also impact oil prices, with Brent around $66 a barrel and West Texas Intermediate around $62. Both affected by both demand forecasts and recent rate exceptions. Analysts suggest that continued trade disputes could further disrupt market dynamics and investor confidence. Traders now look forward to the next monthly report from the International Energy Agency (IEA).

The drop from daily cloud resistance was fast and deep. The price has since rebounded nearly $10 and is now in correction from this upward movement.

Price Crude oil – Brent June 2025 ($/barrel) – day cloud candle, log scale

“There cannot be more demand than supply.” – Beth Garza, think tank R Street Institute

AI infrastructure trading has bounced back significantly after a massive surge. Also known as the Power-Up America basket, a group or category of stocks or investments positioned to benefit from the large-scale push toward electrification, infrastructure upgrades, AI-driven energy demand and domestic industrial growth. Shares of Vertiv, Contellation, Oklo and others have plunged from record highs due to increasing speculation that China’s DeepSeek and other low-cost Large Language Model alternatives will lead to lower demand for capital equipment than currently forecast.

The outlook for U.S. infrastructure and nuclear stocks remains favorable, helped by huge growth in electricity demand in Texas. According to grid operator ERCOT, the state will need about 30 nuclear power plants of additional capacity by 2030 to meet demand. This increase is mainly due to the rise of energy-intensive data centers, particularly for AI applications.

Individual data centers sometimes require as little as 1 gigawatt of power – enough for 250,000 households. This poses significant risks to the stability of the power grid. Requests for new grid connections have more than doubled since March, from 40.8 to 99 gigawatts. ERCOT expects peak demand in 2030 to be 75% higher than the current record of 85.5 gigawatts.

The rapid electrification of the economy, bottlenecks in supply chains (such as slow-delivery turbines and transformers), and ambiguity over who should pay for the expansion create uncertainty. The existing 4CP program – which allows large industrial consumers to avoid costs in exchange for flexibility during peak times – is also coming under pressure. Lawmakers, such as Senator Schwertner, are calling for reform to distribute costs more equitably.

There is also growing concern in Europe about the impact of data centers and digitization on the energy grid:

• In the Netherlands, for example, the construction of hyperscale data centers (such as Microsoft’s and Google’s) led to protests because of their enormous power consumption and use of space and water.
• Germany is also seeing a sharp increase in power demand due to electrification (heat pumps, EVs) and digitalization, while the power grid is already reaching its limits in several places.
• The European Commission is pushing for better “demand response” mechanisms, where large users adjust their consumption to match supply, similar to what is being discussed in Texas.
• At the same time, European countries are considering investments in nuclear power or small modular reactors (SMRs) to ensure sustainable baseload capacity – just as Texas is considering expanding nuclear capacity.

In both America and Europe, it appears that digitalization, AI and the energy transition are putting great pressure on aging grids. Without massive investment and reform, both continents risk rising costs, supply uncertainty and conflict over who should pay this new energy bill.

The price of electricity has fallen back to €75 after moving toward €100 per MWh. On the weekly chart, the price is trading below the cloud. The lagging line is still struggling in the weekly cloud.

Price Baseload Electricity supply year 2026 (eur/MWh) – week cloud candle, log scale

“If the import tariff wars continue to escalate, it usually leads to a decline in global trade and the global economy and possibly in demand for our energy resources. Therefore, there are risks here…” – Elvira Nabiullina, Central Bank Russia, TASS

Russia wants to double its natural gas exports by 2030 and triple them by 2050. The strategy focuses on expanding its exports to “friendly countries” and developing Arctic LNG energy resources. Russia faces economic risks from global market volatility and Western sanctions.

Russia expects to greatly expand its natural gas exports, including pipeline and LNG, under its new long-term energy strategy. The country sees its overseas pipeline and LNG supplies increasing from 146 billion cubic meters (bcm) in 2023 to 293 bcm in 2030 to 438 bcm around 2050. Crude oil and condensate volumes rise from 10.66 million barrels per day (bpd) in 2023 to 10.8 million bpd by 2050.

The new strategy includes measures to accelerate the development of oil and gas processing and the regional gas infrastructure development program. With the aim of ensuring sufficient supply of petroleum products on the domestic market at affordable prices. Under the strategy, Russia will also continue to divert oil and gas exports to new markets in friendly countries. These are mainly the countries to which energy products are supplied since the Western embargoes and sanctions in 2022.

Russia also wants to increase its oil-shipping capacity at its ports in the Arctic and Far East. The country also wants to actively exploit the potential of the Northern Sea Route. These ports are key to moving oil and LNG from its Arctic projects toward markets in Asia. Despite the update of Russia’s long-term strategy, the country expects lower oil and gas receipts in the short term. For the Russian economy, the recent oil price drop may pose risks expects Elvira Nabiullina, governor of the Central Bank of Russia.

You don’t solve a trade deficit with LNG exports alone.

Some traditional buyers of U.S. energy, such as Japan, South Korea and the EU, have indicated they could buy more U.S. oil, LNG or coal. Higher energy imports from trading partners could reduce U.S. trade deficits somewhat, but not completely eliminate them. Also, a commitment and contract to purchase more U.S. energy will not necessarily exempt the buyer from import tariffs.

For most countries, energy is the only viable option to increase imports from America. But trade deficits will remain. On the other hand, U.S. exporters are unable to supply the amount of energy commodities to significantly reduce trade deficits.

A good example is President Trump’s idea that the EU should pledge $350 billion of energy value from America if the bloc wants to avoid import tariffs. The European Union is willing to buy more American LNG if America would reconsider import tariffs, said energy commissioner Dan Jørgensen.

A $350 billion worth of LNG is roughly equivalent to about 40 million tons of the super-cooled liquid, more than half of the EU’s total 2024 LNG imports. This amounted to about 75 million tons and much of this already came from America, Eurostat reports.

The gas market is volatile both ways. From February 2024, the price climbed cautiously with a peak in February this year. A number of long red weekly candles largely wiped out the rise from September 2024.

Price TTF gas supply year 2026 (eur/MWh) – week cloud candle, log scale

“Globally, China is the leader in renewable energy plants, but it is also a leader in coal-fired power and remains the main driver of record high global demand for coal.” – Svetlana Paraskova, OilPrice.com

Weak demand and domestic prices at 4-year lows caused a 6% annual decline in Chinese oil imports. China imported a total of 38.73 million metric tons of coal in March, compared with 41.38 million tons of imports in the same month in 2024. This is concluded based on an analysis of customs data by Reuters. China’s combined January-February coal imports, reported together to smooth out Lunar New Year effects, rose 2% compared with the same period in 2024. The dip in March means Chinese coal imports for the first 3 months of 2025 were a small percent lower than the first quarter of last year. The domestic Bohai-Rim Bay price index of thermal coal shows that the domestic price for medium-grade coal reached its lowest level since March 2021.

In light of lower domestic coal prices, weaker demand and high coal inventories at ports, the March import drop came as no surprise. Analysts expect the trend of lower coal imports to continue in the coming months.

Globally, China is a leader in renewable energy capacity plants, as well as still a leader in coal-fired power plants. The country remains the main driver of record high global coal demand. Thermal power generation, still dominated by coal, increased 1.5% in 2024 compared to 2023. A record 6.34 trillion kilowatt-hours (kWh), as data from China’s National Bureau of Statistics show.

The continued growth in Chinese coal demand, including that for power generation, shows that coal remains the baseload in China’s electricity system. The fuel is needed as a backup to the increase in renewable and this will continue for years to come with increasing electricity demand due to further electrification of homes and transportation.

Price ICE Coal delivery year 2026 (usd/t) – week cloud candle, log scale

“In Taiwan, more than 83% of electricity is generated by fossil fuels, compared to 68.6% and 58.5% in Japan and South Korea, respectively.” – Greenpeace

Greenpeace criticizes Western AI technology and spares China.

Greenpeace has released a report that sharply criticizes Western technology companies for the high emissions associated with the production of semiconductors for artificial intelligence (AI). Big names like Nvidia and Microsoft depend on chip makers like TSMC, Samsung, SK Hynix and Micron, many of whose factories are in Asian countries where most of the power comes from fossil sources.

According to the report,CO₂emissions from AI-related chip production will increase 357% by 2024, even more than the increase in electricity consumption. Greenpeace is calling on governments in East Asia to speed up the transition to renewable energy. Interestingly, Chinese chip manufacturers are not mentioned – despite China’s heavy reliance on coal.

Critics accuse green NGOs of being selective in their outrage. While Western countries are pressured to limit their economic growth with strict climate policies, polluting Chinese factories remain unaffected. This, they say, would lead to an economic disadvantage for the West and a strategic advantage for China. Patrick Moore, co-founder of Greenpeace, argues that some environmentalists are actually guided by anti-capitalist motives wrapped in ecological rhetoric.

The price of emission rights is still in a major correction phase, as are gas and electricity prices. The monthly chart below shows the entire rally from 2017. As of late 2022, the market is in a bear phase.

Price Emission Rights – Dec-25 contract EEX (eur/t) – month cloud candle, log scale

“Britain has a limitless supply of wind that cannot be turned on and off by the whims of dictators and oil states. It is time to get off the fossil fuel roller coaster, roll out clean energy, protect our energy security and bring down bills for good.” – Ed Miliband, energy minister Britain

Britain doubles its wind power – focus on offshore expansion

Britain is increasing its wind energy capacity, especially offshore, with the recent approval of the Rampion 2 project set to begin in 2026. The Rampion 2 expansion of 90 turbines on Britain’s south coast will add 1.2 GW of capacity. Enough to provide electricity to about 1 million homes.

The British government is targeting the quadrupling of its offshore wind capacity by 2030 as part of its net-zero carbon targets. Britain is already a world leader in wind energy through rapid expansion over the past decade of both onshore and offshore wind capacity. Now, under the new Labour government, the country hopes to further expand its wind energy sector through the major expansion of the Rampion offshore wind farm. This project is expected to contribute to the government’s progress in achieving its net-zero carbon ambitions.

By 2023, 46.4% of the UK’s electricity was produced by the use of renewable energy sources, 61% of which is wind energy. About 39.7% of the UK’s wind energy is generated onshore, the remaining 60.3% offshore. Britain built its first commercial onshore wind farm in 1991 with a capacity of 1 GW. By 2024, Britain’s wind energy capacity had increased to 30 GW, twice as much as in 2017. Britain has 11,906 turbines, with 9,141 onshore and 2,765 offshore, consisting of 10 floating and 2,755 fixed turbines. The government hopes to reach 60 GW of wind capacity by the end of the decade. That would add $58.5 billion to the economy.

By early 2025, Britain had seen its offshore wind power capacity grow to the largest in Europe and the second largest in the world after China, at 14 GW. There are plans to double onshore wind, triple solar and quadruple offshore wind power capacity by 2030. The government has also announced plans to reduce the contribution of natural gas in the country’s electricity production to just 5% by the end of the decade.

Last year was a record year for wind energy production, with onshore and offshore projects generating 83 terawatt-hours (TWh) of electricity produced across Britain. An increase of 4 TWh from 2023. In about 10 days in December alone, more than 50% of Britain’s electricity production came from wind. However, there are also less windy periods with lower energy production. This suggests the need for more investment in battery storage technology. This could make the renewable energy source more reliable and reduce Britain’s reliance on fossil fuels during times of low production.

Wind energy in the Netherlands

The Netherlands is also making progress in expanding wind energy. However, the pace and scale of the British approach are more impressive. The Netherlands had about 11 GW of wind capacity in 2024, with a heavy focus on offshore wind farms in the North Sea. Like Britain, the Netherlands is aiming for substantial expansion, with a goal of 21 GW of offshore wind capacity by 2030, according to the Climate Agreement.

Still, the Netherlands lags behind in absolute numbers. Britain, for example, now has nearly 12,000 wind turbines, compared to about 3,000 in the Netherlands. Whereas Britain is strongly committed to economic growth through wind energy (estimated at $58.5 billion in economic value added), the Dutch approach is more cautious and complex due to space use, permitting processes and public opposition.

Interestingly, Britain wants to reduce natural gas use in electricity generation to 5% by 2030. In the Netherlands, natural gas still remains a structural part of the energy supply, partly because of the phasing out of coal-fired power plants and limited storage capacity for wind and solar energy.