Energy market analysis Nov. 19, 2025

A new oil price war in the making

“Defending market share now outweighs defending prices.” – Morningstar, investment research firm

OPEC+, U.S. shale and oil market dynamics

1. Strategic shift of OPEC+

OPEC+ has announced it will increase production to defend market share, deliberately moving away from the traditional pursuit of price stability. On Nov. 2, the group announced a modest increase of 137,000 barrels per day (bpd) for December, followed by a pause in the first quarter of 2026. This decision surprised analysts who had instead expected further restrictions. Increasing supply while prices are under pressure seems counterintuitive, but is primarily aimed at maintaining influence and market share, not short-term price levels.

2. Historical context and strategic logic

This strategy is not new. In 2014 and 2020, Saudi Arabia and Russia also opened oil taps to pressure higher-cost competitors, particularly U.S. shale producers. Although the approach largely failed in 2014, it did lead to the demise of some debt-laden shale companies. The principle remains the same: By temporarily accepting lower prices, OPEC+ can squeeze marginal producers out of the market and later tighten supply to regain pricing power.

3. U.S. shale: flexibility and vulnerability

The recent production increase occurs while U.S. oil production is at a record level of more than 13.7 million bpd. This growth reflects the flexibility of shale producers who can scale up quickly when prices rise and scale down just as quickly when prices fall. This elasticity effectively makes America the world’s swing producer. At the same time, this flexibility represents a weakness: the lack of coordination among hundreds of independent companies leads to collective overproduction when prices rise. This again puts pressure on the market.

4. Psychology and volatility in the oil market

Oil prices are determined not only by physical supply and demand, but also by expectations and market psychology. Futures markets react to signals such as expected surpluses, macroeconomic figures, geopolitical tensions and infrastructure incidents. The market reaction to a surplus of only 500,000 to 600,000 barrels per day can cause price movements long before these volumes are available.

This explains why oil markets often seem disconnected from fundamentals: they reflect not only the current balance sheet, but also the collective assessment of future developments.

5. Structural shift in market power

The rise of U.S. shale has permanently changed the energy landscape. Whereas OPEC used to be able to influence prices with a single announcement, its power is now limited by a U.S. industry that is much more responsive. Still, America is not immune to pressure: shale drilling depends on capital discipline and investor confidence that can quickly erode at prices below $70 a barrel. This gives OPEC+ strategic leverage as it can weather longer periods of low prices than many U.S. producers.

6. Prospects and risks

If Brent prices stabilize around $75 to $80 per barrel, OPEC+ can live with that. This level still supports healthy refining margins for major players. However, in the event of an actual surplus, a drop below $60 cannot be ruled out, and that would severely test the resilience of producers and policymakers.

In a market caught between economic uncertainty, OPEC+ maneuvers and record production in America, volatility is the only constant. Oil is both a geopolitical currency and a commodity. The battle for influence between OPEC+ and U.S. shale will continue to characterize the market as a game of patience, power and price.

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

Affordable energy: the key to success in the global AI race

“China is going to win the AI race.” – Jensen Huang, CEO Nvidia

Energy, AI and geopolitical competition

Nvidia CEO Jensen Huang warns that China is in a strong position to win the global AI race thanks to significantly lower energy costs and less stringent regulations compared with America and Europe. The pursuit of net-zero targets has led to high electricity prices in the EU and Britain, putting pressure on ambitions to become an AI superpower.

AI development relies heavily on affordable energy as growing demand from data centers further drives up electricity prices – even in U.S. energy-intensive regions. This also puts the US leadership position at stake.

Although European and British leaders have announced plans to become AI superpowers, their competitiveness remains weak due to high energy costs. Huang emphasizes that even in America, rising electricity prices are a risk. He states, “China is going to win the AI race,” referring to cheap energy through state support and large-scale hydrocarbon production, in addition to investments in wind and solar power. Since 2021, China has provided an estimated $100 billion in subsidies to the AI industry and is building new coal plants to ensure stable and affordable energy.

In contrast, Europe has relied for years on regulation as an incentive for innovation. However, critics say this has had the opposite effect. Britain is a striking example: due to net-zero policies, electricity prices are among the highest in the world. Without drastic reductions in energy costs, the ambition to become an AI superpower seems unachievable.

Prices are also rising in America due to increasing demand from data centers. This year’s largest capacity auction closed at a record $329.14 per megawatt-day, 22% higher than last year. States with many data centers are seeing sharply rising rates. This also affects households. This trend highlights that energy is a strategic factor in the AI race.

The challenge for the West is clear: either reduce energy costs or accept that China – backed by cheap energy and state intervention – is taking the lead in artificial intelligence. In a market where AI and energy are inextricably linked, affordable electricity becomes a determining factor for technological dominance.

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

Investors return to natural gas due to continued demand growth

“We see very strong demand factors as well as challenges to significantly increase supply in the near term.” –Eric Nuttall, portfolio manager Ninepoint Partners

Natural gas: from controversy to strategic reassessment

Natural gas has gone through a turbulent period in recent years, ranging from its image as an “indispensable bridge fuel” to criticism as “more polluting than coal. European regulations and net-zero policies have long pushed natural gas into the background. Recent developments show a renewed interest in investing in this resource.

Despite attempts to deter investors – such as President Biden’s moratorium on new LNG export capacity, based on a study that labeled LNG as more polluting than coal – global demand for natural gas continues to grow. Publications such as Infrastructure Investor signal a shift in sentiment: investors recognize that the energy transition does not amount to a complete replacement of hydrocarbons, but to supplement them with new sources.

According to Eric Nuttall, portfolio manager at Ninepoint Partners, this confidence continues to increase. He points to strong demand and limited ability to increase supply in the near term. His fund currently has 60% exposure to natural gas, underscoring its strategic role. Natural gas is cleaner than coal, relatively affordable and crucial for stable electricity generation at a time when data centers and AI applications are driving strong energy demand.

This reality explains why major energy companies are revising their focus. Shell announced it is making LNG a priority over the next decade, while BP is shifting its forecast for peak oil demand to 2030 and betting on both oil and gas growth. Exxon is warning the EU that tighter regulations are slowing deliveries as LNG import demand reaches record highs. Companies such as Woodside Energy and TotalEnergies are also expanding their gas operations, driven by projected annual demand growth of about 6% over the next five years.

In short, natural gas is back as a strategic energy source. The threat of shortages from the rapid growth of data centers and the limitations of weather-dependent sources such as wind and solar have reaffirmed the role of gas. For investors and policymakers, natural gas is no longer a transitional fuel, but an essential part of the global energy mix.

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

Energy minister: Trump’s expansion coal industry critical for America

“Coal just makes the world go round, and they’ve tried to strangle it.” – Christopher Wright, U.S. energy secretary

U.S. investment in coal industry for energy security and competitiveness

The US government has announced a $625 million extension for programs aimed at supporting the coal industry. The goal is to keep existing coal plants operational, reduce energy costs and enhance America’s international competitiveness. Energy Secretary Christopher Wright emphasized in an interview that coal is “essential to America’s industrial strength” and pointed to the vast national reserves that can be economically exploited. According to Wright, coal remains one of the most important sources of electricity generation, after natural gas and nuclear power.

He also stresses the importance of coal for steel and cement production, sectors crucial for industrial redevelopment. The investment will be used to modernize power plants and equip them with improved emission controls so they can operate more efficiently and cleanly.

Wright indicated that coal is expected to maintain a 15 to 16% share of the U.S. electricity mix. Fuel will play a role in supporting industrial growth and technological ambitions, including the AI race. He also envisions increased exports, in addition to domestic use, as part of a broader strategy to strengthen the U.S. energy infrastructure.

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

China’s CO₂-emissions stabilize through renewable energy and electric vehicles

“China completed 240 gigawatts (GW) of solar power and 61 GW of wind power capacity in the first nine months of the year.” – Tsvetana Paraskova, journalist OilPrice.com

According to an analysis by Carbon Brief, ChineseCO₂ emissions– from the world’s largest emitter – have shown a flat to slightly declining trend since March 2024. In the third quarter of 2025, emissions were unchanged from a year earlier, despite rising electricity demand. This trend is attributed to the rapid adoption of electric vehicles, which lowered emissions from transportation fuels by 5%, and weaker demand for cement and steel.

The electricity sector saw consumption growth of 6.1% in the first half of the year. Emissions remained stable thanks to a strong expansion of renewable capacity: solar power rose 46% and wind power 11% year-on-year. China added 240 GW of solar capacity and 61 GW of wind capacity in the first nine months. This puts the country on track for a new record in 2025. At the same time, oil demand in transportation fell 5%, while demand for plastics and chemicals rose 10%.

President Xi Jinping reaffirmed in September China’s goal of reducing greenhouse gas emissions by 10% from peak levels by 2035 and expressed ambition to go even further. Analysts see China potentially taking a leading role in global emissions reductions as a result, while America distances itself from climate goals under the Trump administration.

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

German hydrogen strategy under fire: high costs, low results

“There is no significant free market demand for an overpriced eco-product.” – Thomas Kolbe economist & freelance writer

The German Audit Office (Bundesrechnungshof) has strongly criticized the national hydrogen strategy in a recent report. The analysis concludes that on both the supply and demand sides, results fall far short of political goals, making the project a significant financial risk for taxpayers. Since 2020, the sector has been inundated with subsidies; more than €7 billion in public funding has been committed for 2024 and 2025 alone, complemented by approximately €3 billion in private investment. Despite this funding, the current production of green hydrogen is only 0.16 gigawatts, with only 0.2 gigawatts currently under construction.

The report argues that there is hardly any free-market demand for a product that is considered too expensive. Moreover, according to the auditors, the planned infrastructure – including the hydrogen core network – is overambitious, while crucial demand drivers are missing, such as the requirement for new gas-fired power plants to be hydrogen-ready. At the same time, industrial demand is decreasing due to the withdrawal of companies from projects, including ArcelorMittal, HH2E, Forsight Group and RWE.

The situation raises questions about the economic viability of the strategy and the feasibility of the constitutionally established goal of climate neutrality by 2045. Critics see the hydrogen plans becoming a costly subsidy scheme, similar to previous failures in battery production and green steel projects.