Energy market analysis Dec. 3, 2025

Outlook for oil prices according to JP Morgan and Goldman Sachs

JP Morgan: Brent possibly heading toward $30-$40 a barrel by 2027

JP Morgan expects that international benchmark Brent Crude could fall to a price level in the $30-$40 per barrel range by 2027. This decline would result from a continued and overwhelming oversupply in the oil market.

Goldman Sachs: WTI to average $53 a barrel by 2026

Goldman Sachs forecasts an average price of $53 per barrel for WTI Crude in 2026, driven by a surplus of about 2 million barrels per day (bpd).

The bank currently recommends a short position in oil, implying:

• Selling futures contracts on oil.
• Later buy back at a lower price level to realize profits.

Market balance and supply wave

The oil market is not expected to rebalance until 2027, after the current supply wave has been processed. This wave includes OPEC+ production and non-OPEC output from North and South America.

Current price trend

• Brent Crude is currently quoting around $62.50 per barrel.
• Year-over-year decline: about 14%.
• Despite strong supply, analysts and investment banks do not expect a drop to $40 or lower in the near term.

Outlook 2026

The current wave of supply will fully enter the market in 2026, which could reinforce downward pressure on prices.

Price Crude oil – Brent February 2026 ($/barrel) – day cloud candle, log scale

Data centers drive up electricity prices sharply

The rapid growth of data centers, driven by demand for AI training and cloud computing, has led to a significant increase in electricity prices in recent years.

• In some parts of the US, electricity costs are 267% higher than five years ago.
• Bloomberg analyses show that more than 70% of nodes with price increases are within 80 kilometers of significant data center activity.

Why is demand rising so fast?

• AI models require enormous computing power, causing data centers to evolve from small facilities to installations of hundreds of megawatts, sometimes even toward gigawatt scale.
• Electricity demand from data centers is expected to double by 2035, accounting for 8.6% of total U.S. electricity consumption, up from 3.5% today.
• If data centers were a country, they would rank fourth worldwide in terms of power consumption, behind China, America and India.

Impact on the market and consumers

• Higher costs are passed on to households and businesses, even outside direct proximity to data centers, because they all rely on the same power grid.
• Traditional hubs such as Virginia, Texas, Oregon and Ohio remain hotspots for new data center construction, reinforcing regional pricing pressures.

Discussion and counterarguments

• Lobby groups argue that electricity prices barely rise faster than inflation and that data centers have little impact on energy bills.
• However, Bloomberg data and independent analyses show a clear correlation between data center concentrations and price increases.

Future challenges

• Limitations in generation and transmission capacity are a bottleneck for further growth of AI data centers.
• Although efficiency improvements (lower PUE from 1.4 to 1.2 by 2030) are expected, this does not offset explosive demand growth.
• In the short term, fossil fuels fill the gap, but in the long term, pressure from policy and customers will lead to more investment in renewable energy.

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

Biggest U.S. natural gas expansion since 2008: pipeline boom along Gulf Coast

Historical expansion of infrastructure

America is currently realizing the largest expansion of natural gas pipelines in nearly 20 years, concentrated in Texas, Louisiana and Oklahoma.

• 12 major projects for new pipelines or expansions are scheduled for completion in 2026, increasing regional transportation capacity by 13% – enough to cover Canada’s annual gas consumption.
• This marks the largest one-year growth since the 2008 shale gas boom.

Political and economic context

Although many projects began before Trump’s second term, implementation coincides with his energy agenda:

• Expanding U.S. LNG export capacity.
• Strengthening U.S. position in global energy markets.

Regulators in Texas and Louisiana have expedited permits, in line with their pro-fossil infrastructure policies.

Driving forces behind the pipeline boom:

• Explosive growth in global LNG demand: BloombergNEF expects nearly 30% increase between 2025 and 2030.
• America as the largest producer and exporter of natural gas.
• Tens of billions of investments in LNG terminals by companies such as Sempra, NextDecade, Venture Global.
• New terminals, operational from 2027, will rely heavily on these pipelines.

Main projects

• Enbridge Rio Bravo Pipeline (137 miles) – feeds Rio Grande LNG terminal in Brownsville.
• Blackcomb Pipeline (366 miles) – provides export facilities in Louisiana.
• Energy Transfer Hugh Brinson Pipeline (442 miles) – expected as most profitable asset, partly due to increasing demand from AI data centers.
• Expansions by Kinder Morgan and Williams to drain record production in the Permian Basin, where gas prices sometimes fall below zero due to lack of capacity.

Environmental and market discussion

• Environmental groups warn that this infrastructure anchors decades of gas use and undermines climate goals.
• Industry argues that LNG is helping countries transition away from coal and other polluting fuels.

Market Outlook:

• A large wave of LNG supply will reach global markets starting in 2027.
• Forecast: price pressure and possible collapse of LNG prices in the short term.
• Structural rebound only in the 2030s.

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

AI and electricity: a growing infrastructure bottleneck

From innovation to energy challenge

The rapid rise of artificial intelligence (AI) brings not only technological advances but also a fundamental problem: electricity supply. According to a recent UBS report, AI applications are consuming so much energy that U.S. electricity generation capacity is coming under pressure.

• A single NVIDIA GPU now consumes as much power as an average American household.
• Hyperscale data centers, running AI models, are the new wholesale consumers of the grid.

Historical parallels

UBS draws a comparison to the electrification waves of the 20th century:

• 1880-1920: rewiring of industry.
• 1950-1970: appliances and suburbanization.
• 2020-2035: AI and GPUs as a driving force.

As then, innovation leads to an infrastructure challenge. Where cities used to build coal-fired power plants to run lights, hyperscalers now build private energy facilities to keep Large Language Models (LLMs) operational.

Increasing electricity demand

• Expected additional capacity: 100-200 GW within 10 years.
• This amounts to 8-16% on top of current generation, comparable to 10-20 new nuclear reactors or 150+ natural gas power plants.
• Electricity demand is expected to grow 2-3% per year, faster than GDP.

Strategies of hyperscalers

Large technology companies such as Google, Meta, Microsoft and Amazon are investing in infrastructure to provide adequate power to their data centers. Their key strategies are:

• Site selection: Purchase of land in the vicinity of high-voltage power lines to ensure direct access to the power grid.
• Private energy contracts: Enter into long-term agreements with utilities to ensure stable and predictable power supply.
• Innovative solutions: Explore alternative energy sources, including nuclear micro-reactors, to avoid future capacity constraints.

Despite reassuring signals from Washington, the reality is that AI cannot exist without electricity. Competition for available capacity is increasing.

Risks and implications

• Utilities cannot keep up with growing demand.
• Government may have to take emergency measures to prioritize AI.
• Private parties are gaining more and more control over the electricity ecosystem.

UBS concludes implicitly:

• AI will tax the grid more heavily than any technology ever.
• Infrastructure lags behind demand.
• Policy interventions are inevitable.
• Electricity is becoming a strategic asset in the AI era.

The new industrial power struggle

Where Tesla and Westinghouse once competed for AC versus DC, now OpenAI and Google are competing for megawatts. If AI is the new gold, then electricity is the new gold mine – and hyperscalers have already laid the claims.

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

Technology milestone: China launches first commercial supercritical CO₂-generator

China has commissioned the world’s first commercial electricity unit operating on supercritical carbon dioxide (sCO₂). This technology, developed by the China National Nuclear Corporation (CNNC), is seen as an important step toward more efficient and cleaner power generation.

How does it work?

• Instead of traditional steam, the system uses CO₂ under supercritical conditions (high pressure and temperature), giving it liquid properties.
• The process uses a Brayton cycle, as opposed to the Rankine cycle of conventional steam systems.
• Result: more than 50% higher energy conversion efficiency and significantly smaller turbines and components.

First commercial application

• Location: Shougang Shuicheng Steel Complex, Liupanshui, Guizhou.
• Configuration: two 15 MW units connected to the power grid.
• Goal: convert waste heat from steel production into electricity.
• Efficiency: about 50% better than traditional waste heat solutions.

Potential applications

Researchers see broad potential for sCO₂ technology:

• Advanced nuclear reactors.
• Mobile nuclear systems.
• Space Energy Supply.
• Concentrated solar installations.

Development history

• More than 10 years of research by CNNC and Jigang International Engineering & Technology.
• 2019: stable full-power laboratory operation.
• 2023: start construction of commercial plant.
• Goal: Lay technological foundation for large-scale rollout in the future.

Why is this important?

• sCO₂ systems offer a compact, efficient and low-carbon solution for industrial waste heat and future power generation.
• The technology can contribute to China’s emission reduction and energy efficiency strategy, while also being relevant to global energy transition.

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

EU weakens sustainability and due diligence rules: change of course in climate policy

“The European Parliament has paved the way for a drastic weakening of corporate reporting requirements under the Corporate Sustainability Reporting Directive (CSRD) and so-called due diligence rules (CSDDD).” – Thomas Kolbe, economist and freelance writer

What was decided?

On Nov. 13, 2025, the European Parliament approved a sweeping relaxation of sustainability reporting and due diligence obligations for companies. These changes are part of the so-called Omnibus I simplification package, which aims to reduce administrative burdens and strengthen European competitiveness.

Key changes

• Corporate Sustainability Reporting Directive (CSRD).
  • Reporting requirement still applies only to companies with:
    • ≥ 1,750 employees
    • ≥ €450 million in revenue
  • Sector-specific reporting becomes voluntary.
  • Small businesses are protected from additional information requests from large partners.
• Corporate Sustainability Due Diligence Directive (CSDDD).
  • Applicable to companies with:
    • ≥ 5,000 employees
    • ≥ €1.5 billion in revenue
  • Mandatory climate transition plans expire.
  • Liability shifts to national level, no longer EU-wide.
• Digital portal for companies with free access to templates and guidelines is being set up by the European Commission.

Why this change in direction?

• Political pressure: The vote followed months of intense lobbying by business organizations and member states such as Germany and France, which warned of negative effects on competitiveness and investment.
• International influence: According to Reuters, America and Qatar exerted indirect pressure partly because of their role as major LNG suppliers and trading partners. American officials have even advised European companies to ignore ESG rules if they interfere with business operations.
• Economic reality: Europe imports about 60% of its energy needs and faces rising costs and security of supply risks. This increases dependence on resource-rich countries and puts pressure on climate ambitions.

Impact on businesses and markets

• Fewer obligations: Companies gain more flexibility in supply chains and no longer have to invest in carbon-neutral projects under duress.
• Fossil sector benefits: Exports to Europe become easier due to fewer reporting and compliance requirements.
• Risks: NGOs and climate organizations warn that weakening rules could lead to less transparency, higher risk of human rights violations and environmental damage in global chains.

Political and social context

At COP30 in Belém, Brazil, UN President Annalena Baerbock emphasized that “the climate crisis is the greatest threat of our time” and pointed to the vulnerability of 3.6 billion people to climate change. This message contrasted sharply with the pragmatic change of course in Brussels, where fear of economic stagnation and social unrest outweighed ambitious climate goals.