Energy market analysis July 15, 2026

Russia’s diesel ban moves the risk down the barrel

The oil complex is being pulled in two directions. At the top of the barrel, the United States has been confirmed as the world’s largest crude producer for a eighth consecutive year, pumping a record 13.6 million barrels a day in 2025 on EIA data relayed by The Epoch Times — well ahead of Russia (9.9 mbd) and Saudi Arabia (9.6 mbd), with Canada fourth at 5 mbd. Output rose even as prices fell: West Texas Intermediate averaged $65 last year against $77 in 2024. The EIA credits steady gains in shale drilling productivity and well efficiency, and expects US production to edge up to about 13.7 mbd this year and 14.2 mbd in 2027.

Data source: U.S. Energy Information Administration, International Energy Statistics

Exports have climbed alongside. US crude and product exports hit a record in April, with crude alone averaging 5.6 mbd — 21% above the previous peak — as disruption to shipments through the Strait of Hormuz during the Iran conflict redirected global demand toward American barrels. Brent spiked above $126 in April and eased over the spring, but by mid-July had climbed back above $85 as renewed US strikes on Iran again threatened shipments through the Strait of Hormuz.

Source: Bloomberg from Zerohedge

The real pressure point, however, has moved to the middle of the barrel. Russia has banned diesel exports to shore up domestic supply after Ukrainian drone strikes pushed refinery runs to multi-year lows and forced fuel rationing in several regions. “Today we introduced a ban on exports of diesel,” Deputy Prime Minister Alexander Novak told a government meeting. The measure widens an earlier ban that had applied only to non-producing traders, and sits on top of existing curbs on most gasoline and jet-fuel shipments. Even before it took effect, Russian diesel and gasoil exports had roughly halved versus 2025, averaging about 490,000 b/d in early June.

Source: Bloomberg from ZeroHedge

Russia supplied close to 11% of the world’s seaborne diesel last year, and its retreat has driven diesel margins to record highs that have diverged sharply from crude, at least for now. The distinction matters for buyers: diesel is the fuel of freight, of agricultural and horticultural logistics, and of the back-up generation that hospitals and industrial sites depend on. Even with crude firmer in the mid-$80s, the diesel crack is at record levels, and companies whose costs track gasoil rather than headline crude, especially those on variable or spot terms, face a squeeze that the Brent price alone does not reveal.

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

Nuclear’s comeback answers the baseload question but not this decade

The baseload answer to Europe’s electrification push is increasingly nuclear. A new BloombergNEF outlook, reported by OilPrice, sees global nuclear capacity rising 44% to 535 GW by 2036, up from 372 GW at the end of 2025. China — which had 59 GW under construction late last year — is expected to almost double its fleet to 102 GW and overtake the United States as the world’s largest nuclear nation, with Beijing planning to bring seven new reactors online this year alone.

Source: BloombergNEF

BNEF frames the turn bluntly: nuclear has been “running in place” since the 2011 Fukushima disaster, and that status quo is now set to change. The drivers are familiar — surging demand from industry, electrified homes and power-hungry data centres, alongside energy-security concerns, decarbonisation targets and rising public acceptance. India illustrates both the ambition and the price tag: a government panel has estimated that reaching 100 GW of nuclear capacity by 2047, from just 8.8 GW today, would require some ₹19.28 trillion ($204 billion) of cumulative investment under its Nuclear Energy Mission.

The brake is regulation. Slow permitting has historically dragged on new projects, and even in the US — where the technology enjoys strong political support — only one commercial reactor is currently under construction, though the pace is expected to accelerate. For Europe’s continuous industrial and healthcare loads, which cannot easily flex, the credibility of firm low-carbon supply is what anchors long-dated power curves. The timing caveat is crucial: capacity arriving in the 2030s does little to move prices this decade, so the near-term balance still rests on gas and on the weather.

Price Baseload Electricity supply year 2027 (eur/MWh) – week cloud candle, log scale

A gas-turbine shortage quietly underwrites demand

A quieter but structural gas story is playing out on the supply side of power. The IEA, cited by the Financial Times and relayed via OilPrice, expects US companies to spend some $50 billion on coal- and gas-fired generation this year — out-investing China in the two fuels for the first time in decades, by roughly $3 billion. The driver is the American data-centre boom: operators placed orders for around 20 GW of gas-turbine capacity in the first quarter alone, betting on gas, and in places coal, for the round-the-clock baseload their facilities require.

That demand has collided with a supply deficit. Turbine output has been broadly flat for years, and prices have jumped from about $800 to over $2,500 per kilowatt on Rystad Energy figures. Siemens Energy, one of the big three makers, reported a record quarter for orders, with 102 new gas-turbine orders booked, around 40% from the US and 35% from Europe. Mitsubishi, having first aimed to lift capacity by 30%, has said even that is not enough and is now doubling production, calling order fulfilment its “top priority.” The growth of wind and solar adds to the pull as well, since intermittent generation needs firm or flexible backing to balance the grid, though that can come from storage, demand response or interconnection as much as from gas.

The turbine bottleneck cuts both ways. It shows how much new gas capacity developers expect to need, yet by stretching lead times to several years it also slows how quickly that capacity can be built. The likeliest net effect is that gas stays central to the power mix for longer than many transition timelines assume, which keeps gas-price risk relevant for gas-intensive sectors such as glasshouse horticulture, food processing and heavy industry, and keeps the value of budget certainty in view when weighing fixed or structured cover.

Price TTF gas supply year 2027 (eur/MWh) – day cloud candle, log scale

A super El Niño hands India back to coal

Weather is re-entering the fuel equation. The Finnish think-tank CREA, reported via OilPrice, warns that this year’s super El Niño, if it develops as forecast, could strain energy systems worldwide but none as severely as India’s. The shortfall would be driven mainly by higher cooling demand as temperatures rise, compounded by the weaker winds and lighter rainfall the pattern tends to bring, which cut wind and hydro output. Combined, CREA puts the potential generation gap at nearly 18 TWh over the next twelve months, of which extra air-conditioning load alone could account for as much as 10 TWh.

Most of that shortfall, the think-tank expects, will be bridged by coal — releasing an estimated 17 million tonnes of extra CO₂. India, the world’s second-largest coal user after China, still draws about 70% of its power from the fuel and continues to lean on it to avoid blackouts during severe heatwaves, even as renewable capacity booms. “We cannot be subjective about coal,” NITI Aayog energy adviser Rajnath Ram has said; the question, he added, is how sustainably it can be used. Officials expect coal to remain central to the system for the next two decades.

For European buyers the effect is second-order but real. Stronger Indian coal burn can tighten seaborne supply in the Pacific basin and, at the margin, feed into the international coal and gas balance to which European power is exposed, though the link is indirect and easily offset by other factors. The broader point is that climate variability is increasingly a factor in fossil-fuel pricing, not only in renewable output, and a source of the volatility that businesses on variable contracts ultimately absorb.

Price ICE Coal delivery year 2027 (usd/t) – week cloud candle, log scale

Allowances hold near €80 as small reactors edge toward the mix

The emissions market itself was comparatively quiet but firm. EU allowances (EUA) traded around €80 per tonne in mid-July, near their strongest since February, supported by geopolitical risk premia and expectations around EU policy, on Trading Economics / ICE data. With the ETS cap tightening year after year, the structural direction of compliance costs for European installations remains upward, which keeps the spotlight firmly on any technology that can deliver low-carbon power at scale.

Source: Ranked: Countries Building the Most Small Modular Nuclear Reactors from Visual Capitalist by Cody Good;Graphics & Design by Abha Patil

The most forward-looking development sits on that low-carbon supply side. Because new nuclear carries very low life-cycle emissions, it belongs in the carbon conversation as an abatement lever rather than a source. A Visual Capitalist and National Public Utilities Council graphic, also covered by OilPrice, shows the United States leading small modular reactor (SMR) development with 28 siting announcements — more than the next four countries combined, ahead of Canada (9), the UK (7), Russia (5) and China (4). These are announced potential locations, not reactors yet under construction.

Source: Visual Capitalist by Cody Good; Graphics & Design by Abha Patil

SMRs generate up to 300 MWe — a fraction of a conventional reactor’s 1,000–1,400 MWe — but are designed for factory manufacture to cut cost and build time, and their compact footprint makes them deployable at data centres or remote sites where a grid connection is costly. Designs span light-water, fast-neutron, high-temperature graphite and molten-salt types; of 129 tracked by the Nuclear Energy Agency, only 78 are publicly reported. Within the US, national laboratories lead siting activity (7), ahead of a three-way tie between utilities, universities and developers (5 each).

For carbon-exposed European industry the relevance is directional rather than immediate. A credible build-out of firm, low-carbon generation would, over time, lower demand for allowances and so soften prices, but it would not change the legally fixed ETS cap itself, and any such effect lies well beyond current contracting horizons. On present evidence, businesses budgeting for carbon cost should plan for allowance prices that stay firm to higher, treating SMRs as a long-dated option on cheaper abatement rather than a near-term relief valve.

Price Emission Rights – Dec-26 contract EEX (eur/t) – day cloud candle, log scale

When prices spike, energy buyers start building their own supply

High prices are pulling clean-energy investment forward, nowhere more visibly than in the Philippines, the biggest spender on imported solar panels between March and May once the Netherlands, a European re-export hub, is set aside. The country spent $407 million on panels over those three months on China customs data reported via OilPrice, second only to the Netherlands’ $1.1 billion. The trigger is cost: top distributor Meralco has raised tariffs 10% since the Iran conflict began in late February, and a median household now spends about 12% of its income on electricity, against some of the highest residential tariffs in South-East Asia.

Source: China customs data, Ruth Chai Reuters cited by ZeroHedge

The response has been rapid. Rooftop installations have nearly doubled over the past year, and clean-energy think-tank Ember expects distributed solar capacity to almost triple to 3,500 MW within two years as payback periods shorten to about 3.1 years from four. Manila installer Philergy reported two-and-a-half times as many enquiries in the first five months of the year, at one point fielding 3,000 a day; customers are deciding “much faster than before,” managing partner Jochen Staudter said. Even so, solar still supplies under 4% of national consumption, and the boom faces headwinds from high upfront costs and supply-chain strains. Pakistan shows the same pattern at scale, having added 27 GW of distributed solar in two years — as much as all its coal, gas and oil plants ever built.

Source: Meraico -largest electricity retailer by end-users, Ruth Chai, Reuters cited by ZeroHedge

Europe is running a version of the same logic at grid scale. Britain’s energy regulator has provisionally selected three major pumped-storage hydro projects for support, the first in more than 40 years, pending final approval: Statera’s Loch Kemp on Loch Ness, SSE’s Coire Glas on Loch Lochy, and Gilkes Energy’s Earba, set to be the UK’s largest. Together they would exceed 10 GW and 200 GWh, roughly a quarter of the UK’s daily power demand, once completed in the early 2030s. They would be the first such schemes since Dinorwig, the north-Wales “electric mountain,” came online in 1984.

Source: Department of Energy Philippines, Ruth Chai, Reuters cited by ZeroHedge

Pumped storage works as a giant grid-scale battery, moving water between two reservoirs to store surplus power and release it on demand, a natural complement to intermittent wind and solar and, as the government notes, an alternative to lithium-ion batteries and the Chinese raw-material imports they require. “Britain cannot afford to remain at the mercy of volatile fossil fuel markets,” energy minister Michael Shanks said, casting storage as insurance against the next price shock. The two stories sit at opposite ends of the system: households in the Philippines are adding generation behind the meter, while Britain is building storage at grid scale. Of the two, the behind-the-meter shift is the more immediate for most businesses; when grid tariffs spike, the payback on on-site generation and storage shortens, making self-supply as much a resilience and procurement question as a sustainability one.

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