Energy market analysis Nov. 5, 2025

Between a dock and a hard place

“The most anticipated abundance of oil in history.” – Eric Nuttall, Senior Portfolio Manager Ninepoint Partners

The price of crude oil recently reached its lowest level in five months. Following U.S. sanctions against Russian oil companies Rosneft PJSC and Lukoil PJSC, prices rose again. India and China have indicated they may reduce their purchases of Russian oil and are looking for alternative suppliers.

India is expected to need to tap more domestic oil and gas reserves to meet future energy demand. The front-month contract price for supertankers on the benchmark route from the Middle East to China rose 16% recently. The highest level in nearly two years according to data from the Baltic Exchange, quoted by Bloomberg.

“We expect demand for alternative oil sources to be greater and longer-lasting, given the extensive number of Russian producers under OFAC sanctions,” said Anoop Singh, shipping research specialist at Oil Brokerage.

Rates for supertankers had already increased in October due to reciprocal restrictions on port visits under the US-China trade relationship. These restrictions could lead to disruptions in global oil flows.

According to ICE Futures Europe, money managers have increased their short positions on the global benchmark to record levels. This increases the chances of a so-called short squeeze, where investors have to buy back their sold positions, which can lead to price volatility.

Global oil traders are anticipating a possible upcoming supply glut, based on signals of an increase in offshore crude stocks. This increase is due to continued production by oil producers, with deliveries requiring longer and longer transportation routes.

Within the OPEC+ group, production is increasing due to the reversal of previous production cuts. Countries outside this group, such as Guyana with a new offshore oil field, are also increasing their output. U.S. oil production also reached a new record.

This inventory build-up occurs at a time when growth in global demand is slowing. Projections point to a possible surplus of 4 million barrels per day in the first months of 2026. At the same time, onshore inventories are lower than expected. According to analyst Eric Nuttall, onshore inventories fell by 39 million barrels in the first 20 days of October. These are currently at the lowest level against the five-year four-month average. Specific processing destinations have already been identified for onshore oil stocks.

China continues to actively replenish its strategic petroleum reserve at around 500,000 barrels per day, indicating sustained demand. Oil consumption in America also rose to its highest level in 18 years, at 20.59 million barrels per day.

In summary, the oil market is currently characterized by strong fluctuations in supply, demand and market positioning.

Brent oil prices for January delivery remain above the April and May lows, just above the $60 mark. Both the price and the “lagging line” (an indicator that looks back 30 periods) are below the daily Ichimoku cloud, a technical analysis tool that provides visual insight into market trends.

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

Spanish gas demand rises sharply after blackout

“The exceptional and unprecedented nature of this incident – the first time a cascade of disconnections of generation components combined with voltage surges was part of the series of events that led to a power outage in the synchronous area of continental Europe.” – ENTSO

Spanish demand for natural gas for power generation increased by nearly 37% between January and September 2025. This increase is linked to an increased use of gas-fired power plants to ensure grid stability, partly in response to the large-scale power outages earlier this year.

In late April, Spain and Portugal were hit by a prolonged power outage considered one of the worst in the region’s modern history. This incident highlighted the importance of grid stability and flexibility, especially in a context of growing renewable energy capacity.

As a result of the blackouts, the share of electricity generation through combined gas and steam cycle power plants in Spain increased by 36.8% compared to the same period in 2024. According to grid operator Enagás, natural gas plays an important role in strengthening security of supply.

Total Spanish natural gas demand, including exports, was about 267.6 terawatt-hours (TWh) in the first nine months of 2025, up 6.6% from the previous year. Exports to France also increased, due in part to the filling of underground storage facilities and maintenance work on French regasification plants.

An expert panel of the European Network of Transmission System Operators (ENTSO-E) published earlier this month a preliminary report on power outages in April. In it, excessive grid voltage is cited as the main cause. A final report with an in-depth investigation of the root causes is expected in the first quarter of 2026.

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

EU energy ministers want to get rid of Russian gas within two years

“I think you know our position. We are one of the few countries in the region without access to the sea. Therefore, our position has always been based on energy security for Hungary.” – Aniko Raisz, Hungarian environment minister

EU energy ministers aim to start phasing out Russian gas imports completely within two years. The goal is to end these imports completely by 2028. The proposal, which should take effect Jan. 1, 2026, provides for phasing out existing contracts for both pipeline gas and liquefied natural gas (LNG).

Existing contracts can continue until June 17, 2026, while long-term contracts must be terminated by Jan. 1, 2028. Member states with limited alternatives, such as Hungary and Slovakia, are given some flexibility in implementation. If the proposal is approved by the European Parliament, member states still dependent on Russian gas – directly or indirectly – will be required to submit plans to diversify their energy supply.

Between the first quarter of 2021 and the second quarter of 2025, the EU significantly reduced its imports of Russian energy. The share of Russian gas fell from 39% to 13% during this period. At the same time, the value of LNG imports from Russia tripled, although their share of total EU LNG imports remained relatively small. Most substitution took place via LNG from the United States, Qatar and Norway.

By 2024, Russia accounted for less than 19% of total EU gas and LNG imports. Slovakia and Hungary continue to receive Russian oil through the Druzhba pipeline and maintain closer energy relations with Moscow than other member states. Both countries indicate that alternative energy sources are currently less economically feasible.

Hungarian Prime Minister Viktor Orbán has repeatedly called to reconsider EU policy on ending Russian energy imports. Slovakia has also been critical, including in response to calls by former President Donald Trump to limit Russian oil imports.

Slovak Foreign Minister Juraj Blanár emphasized at the Sept. 24 UN meeting that sustainable and affordable alternatives are currently lacking: “It takes time to diversify. That is why we ask for some empathy.”

Hungarian Foreign Minister Péter Szijjártó stated on the same date that Hungary will not stop taking Russian oil: “We are a country without access to the sea. If we had that access, we could build a refinery or LNG terminal and have access to the world market. But that is not the case.”

The price of TTF gas for delivery in 2026 remains stable around €30 per megawatt-hour (MWh). As in the oil and electricity markets, price movement in this market is currently limited.

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

Germany blows up last nuclear power plants as economy collapses

“The future of the country’s children and grandchildren has been thrown away in a Germanic frenzy.” – Thomas Kolbe, economist & freelance writer

1. End of nuclear power in Germany

On Oct. 25, 2025, the last cooling towers of the nuclear power plant in Gundremmingen, Bavaria, were demolished. With this, Germany marks the definitive end of its nuclear power generation. Despite a long history of safe and reliable nuclear power, which provided about 30% of electricity at the turn of the century, the country opted for a complete phase-out. This decision was accelerated by the political reaction to the Fukushima disaster in 2011, after which almost all parliamentary parties agreed to a nuclear power exit.

2. Political and ideological background

The phase-out of nuclear power in Germany is strongly politically and ideologically motivated. Environmental movements and antinuclear activists have built up influence within the Green Party and other political movements since the 1960s. Partly due to media coverage and institutional influence, nuclear power in Germany has gradually been replaced by policies aimed at renewable energy, despite the technical advantages of nuclear plants for stable energy supply.

3. International developments and contrast with Germany

While Germany bases its energy policy on the Green Deal and climate goals, other countries, such as America, are opting for a renewed commitment to nuclear power. The US government has plans to quadruple nuclear capacity by 2050, including through small modular reactors (SMRs) and accelerated licensing processes. Around 440 reactors are currently operating worldwide, accounting for 9% of electricity generation. This share could rise to 12% by 2040, with projected capacity growth of 87%.

4. Nuclear power as a stable source of energy

Nuclear power offers continuous, schedulable electricity production, independent of weather conditions or daylight. This makes it suitable for industrial applications and critical infrastructure. Unlike renewable sources, which cause fluctuating grid loads, nuclear power contributes to grid stability and security of supply. Its high capacity factor and low emissions make it an efficient and reliable energy source in a highly industrialized system.

With lower energy needs in mild temperatures and available renewable generation (such as wind and solar), the use of coal plants is limited. There is currently no indication that these fundamental factors will change in the near term.

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

The green illusion: the hidden costs behind the advance of electric vehicles

1. Innovation in electric driving

An electrified 2-kilometer highway has come into operation in Sweden, allowing electric vehicles to charge while driving. This project serves as a prototype for a planned rollout of 3,000 kilometers by 2045. While presented as a technological advance, it raises broader questions about the true environmental impact of electric vehicles.

2. Environmental costs of electric vehicles

Electric vehicles are often presented as emission-free solutions. However, the production of lithium-ion batteries involves significant environmental burdens. Mining and processing of raw materials such as lithium, cobalt and rhodium often takes place in regions with limited environmental protection, leading to air, water and soil pollution. In addition, production is powered by fossil energy sources, which increases overall carbon emissions.

3. Energy source and lifetime

Many electric vehicles run on electricity that still comes largely from fossil sources. The production of an EV has high initial emissions. It takes an average of seven years to offset these emissions compared to a conventional gasoline car. Since batteries typically last 10 years, the environmental benefit is limited. The cost of battery replacement is also significant.

On Nov. 3, the price of European allowances rose nearly 4%, to above €80 per ton. This increase reflects the volatility of the market and the impact of policy measures on the price development of CO₂ emissions.

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

China’s battery giants flood markets as exports rise 220%

“The industry always said you either had to go abroad or get out of the market.” – Gao Jifan, CEO Trina Solar

1. Overcapacity in China’s battery industry

In the past year, the average utilization rate of China’s battery production fell to about one-third of maximum capacity. This decline resulted from years of investment and expansion that led to severe overcapacity. Smaller manufacturers in particular came under pressure. This led to consolidation in the industry and a shift in focus to export markets.

2. Strong growth in export orders

According to the China Energy Storage Alliance Chinese battery producers secured 200 foreign orders in the first half of the year, accounting for a total of 186 gigawatt hours (GWh) of storage capacity. This represents an increase of more than 220% over the same period last year. Most of the exports went to the Middle East, Europe and Australia. Only a small portion (5.34 GWh) of these exports went to the Americas, mainly due to high import tariffs.

3. Global investment and technological development

According to research firm Wood Mackenzie global investment in battery storage is expected to reach about $1.2 trillion by 2034. These investments are needed to enable the installation of more than 5,900 GW of new wind and solar capacity. Advanced battery technologies that contribute to grid stability are considered essential in an energy system that is increasingly dependent on renewable resources.

4. Acceleration of battery storage in America

In America, battery storage has long played a marginal role in the electricity system. Utilities focused primarily on gas-fired power plants and renewable energy. However, falling costs and improved energy density have accelerated the adoption of battery storage. Since 2020, utility-scale battery capacity has increased to about 30,000 MW, an increase by a factor of ten. Nineteen states have now installed more than 100 MW.

The combination of solar power and battery storage is now cost competitive with new natural gas and coal plants, according to data from Lazard. The asset management company estimates the levelized cost of electricity (LCOE) for large-scale solar farms with battery storage to be between $50 and $131 per megawatt-hour (MWh). That makes this combination comparable to the cost of new natural gas plants for peak load ($47-$170 per MWh) and even to new coal plants where the LCOE is around $114 per MWh.

Electric mobility: Norway leads the charge

The global market for battery-electric vehicles (BEVs) crossed the 10 million annual sales mark for the first time in 2024. A 10% increase from 2023. According to the International Council on Clean Transportation (ICCT), China reached a major milestone of more than one million electric vehicles sold in one month in May 2025.

Although China leads the world in absolute sales volumes, some European countries continue to lead in adoption rates, measured as the share of BEVs in new car sales. Norway is a notable exception in this regard. By the first half of 2025, more than 90% of newly registered passenger cars were fully electric, according to data from PwC.

Denmark and the Netherlands also show high adoption rates, with 63.6% and 35% market share for BEVs, respectively. Outside Europe, China is also leading in adoption, with a BEV share of 29.8% in the first half of 2025, including commercial vehicles. By comparison, America lags behind with a 7.3% share.