The 5 Energy Events of 2025
The $60s Oil Trap, Why America's Gas Boom and AI's Power Hunger Are Building the Next Energy Super Cycle
In case you missed it, here is the previous article:
Dear Merchants,
Before we dive into today’s analysis, I want to take a moment to thank each of you for reading and supporting this newsletter throughout the year. I truly hope you’re spending these final days of 2025 relaxing, enjoying some well deserved time off, and recharging your batteries for what could be an extraordinary 2026.
It’s been an incredible year sharing these insights with you, and your engagement and support have meant a lot to me. As we stand at the threshold of a new year, I can tell you with complete confidence stay with us, because 2026 is going to bring remarkable opportunities and transformations in the energy markets that you won’t want to miss.
Now, let’s talk about what happened in 2025 and more importantly, why everything that seemed disconnected is actually part of one massive, interconnected story that’s reshaping the global energy landscape as we speak.
If you’ve been following energy markets this year, you might think 2025 was just a chaotic mess oil prices crashing, LNG exports booming, electricity grids straining under AI demand, offshore drilling coming back to life, and geopolitical tensions flaring up everywhere from the Persian Gulf to Caracas. But these aren’t separate stories. I sum up 5 chapters of the same book, and understanding how they connect is the key to positioning yourself for the opportunities that 2026 will bring.
1) America Becomes the Gas King
Let’s start with the most important transformation, the United States didn’t just become a major LNG exporter in 2025 now US is the dominant force in global gas markets, fundamentally rewriting the rules of international energy trade.
US LNG exports surged 25% yoy through October, and in that single month, America became the 1st country in history to export more than 10 million tonnes of LNG. Feedgas flows the natural gas piped to liquefaction terminals hit over 500 million cubic meters per day by early November. This is a structural shift in global energy architecture.
US shipments to Europe jumped 65% yoy, while shipments to Asia dropped nearly 40%.
Why? Because American LNG is the world’s new “swing supplier” flexible, responsive to price signals, and capable of redirecting cargoes wherever demand (and prices) are highest. The Netherlands, France, and Spain absorbed 2/3 of US LNG, effectively replacing Russian pipeline gas with American molecules.
The investment momentum tells you everything about where this is headed. The US LNG industry secured final investment decisions on more than 80 billion cubic meters per year of new capacity in 2025 alone an all-time record. Global LNG projects attracted $72 billion across 6 major developments. Developers locked in sales contracts for 29.5 million metric tonnes per year more than four times what they contracted in all of 2024.
By 2026, US export capacity will hit 16.3 billion cubic feet per day, up 37% from 2024 levels. And this isn’t just about business it’s about geopolitics. Europe’s energy security now depends on American gas, not Russian pipelines. That’s a fundamental realignment of Western energy relationships, and it’s permanent.
2) The Oil Market Breaks Down
Now, while natural gas was booming, crude oil was doing the exact opposite and this is where our story starts to connect.
WTI crude collapsed to around $55 per barrel by late December, down from over $70 in early 2025. This was a technical breakdown that confirmed deeper structural problems.
Global oil demand grew in 2025 up just 0.8 million barrels per day (0.7%) in Q3 compared to the prior year. Meanwhile, global production surged 3.0 million barrels per day to reach 106.1 million bpd.
Do the math, that’s a 2.7 million barrel per day surplus in Q3 alone.
The signs of oversupply were everywhere. Oil cargoes in the Middle East couldn’t find buyers. The amount of crude stored in tankers at sea increased substantially a classic signal of a market that’s drowning in supply. The World Bank confirmed it we’re looking at a genuine global oil glut.
Forecasts are uniformly bearish. The EIA expects Brent to average $55 per barrel in 2026. ABN AMRO projects it could fall to $50 by year end 2026 as the glut worsens. Technical patterns look terrible RSI declining, triangle formations suggesting further breakdown, momentum firmly negative.
(If you want to know my view on oil prices and why the could go up have a look at my article here)
Here’s the first connection in our story the LNG boom and the oil collapse are 2 sides of the same coin. As the world pivots toward gas cleaner, cheaper, and now abundantly supplied by America but oil demand growth is not leaving . Europe is burning American LNG instead of russian gas. Asian buyers are increasingly gas-focused. The energy transition isn’t happening through renewables alone; it’s happening through gas displacement of oil.
3) AI Breaks the Electricity Grid
While oil prices were collapsing and gas demand was booming, something truly unprecedented was happening to electricity demand.
Data center power demand exploded by 11.3 gigawatts in 2025 alone, reaching 61.8 GW total a 22% increase in a single year. By 2030, data centers will consume 134.4 GW, more than double their current load. The IEA projects data centers will surge from 415 terawatt-hours annually today to 945 TWh by 2030, approaching 3% of global electricity consumption. AI alone will account for over 20% of total electricity demand growth through the end of the decade.
The regional concentration is creating acute infrastructure crises. Virginia’s data center demand jumped 30% to 12.1 GW. Texas hit 9.7 GW, up from under 8 GW in 2024. American Electric Power reported customer commitments for 24 GW of new demand by 2030 including 18 GW from data centers alone. That’s x5 times the scale of their current system.
Approximately 23% of new data centers planned over the next decade will exceed 500 megawatts each. Some will surpass 1 gigawatt equivalent to a nuclear power plant, but with the flexibility of a tech campus.
Now let’s connect the dots. This is where the natural gas boom becomes essential to the modern economy. These data centers need baseload power reliable, 24/7 electricity that wind and solar simply cannot provide at scale. Gas fired generation is the bridge that makes AI possible. When OpenAI cuts a deal with Nvidia for 10 gigawatts of dedicated data center capacity electricity equivalent to New York City’s peak summer demand they’re not building solar farms. They’re looking at gas turbines, on-site generation, and potentially small modular nuclear reactors down the line.
The LNG export boom isn’t just about heating European homes; it’s about powering the AI revolution. American natural gas is becoming the fuel of the digital economy, and that creates a structural demand floor that wasn’t in anyone’s models 2 years ago.
4)The Great Offshore Revival
While everyone was focused on AI and data centers, something fascinating happened in oil production the geography of drilling fundamentally shifted.
US crude output from the Gulf of Mexico increased 100,000 barrels per day in 2025 to reach 1.89 million bpd, with more growth projected for 2026. Meanwhile, onshore production in the lower 48 states is only growing by 190,000 bpd in 2025 and may actually decline in 2026. For the first time since the shale revolution began, offshore production growth is outpacing onshore.
Technology unlocked this shift. Equipment now operates routinely at 20,000 psi, up from 10,000-15,000 psi just a few years ago, opening vast new deepwater formations. Producer demonstrated that offshore projects remain profitable at $35 per barrel remarkable given that oil is trading around $60s.
The Trump administration accelerated this trend, mandating at least 30 offshore lease sales in the Gulf over the next 15 years, with reduced royalty rates to attract bidders. Policy, technology, and economics aligned perfectly to drive capital offshore.
The oil price collapse is simultaneously killing onshore investment while making offshore relatively more attractive. When oil sits in the $60s, marginal shale wells in the Permian Basin don’t get drilled. But large scale offshore projects with multi year development timelines and billion dollar budgets? Those projects, already committed and capital intensive, keep moving forward. Offshore becomes the only game in town.
OPEC warned of a $14.9 trillion investment gap in upstream oil operations between 2025 and 2050 equivalent to $574 billion annually. That’s not a forecast; it’s a warning. Low prices in 2025-2026 are destroying the capital investment needed to meet oil demand in the late 2020s and 2030s. The offshore revival is happening, but it’s not nearly enough to offset the onshore collapse.
This is the setup for the next price super-cycle. We’re currently in the oversupply phase, with prices crashing and investment cratering. But the laws of supply and demand haven’t been repealed. When capital investment falls below replacement levels which it clearly has supply deficits become inevitable. The oil crash of 2025 is planting the seeds for the oil boom.
5) Geopolitics Refuses to Cooperate
Throughout 2025, geopolitical tensions should have sent oil prices soaring. Instead, they created volatility without sustained impact and that tells us something crucial about where the market really is.
In June, Iran-Israel tensions exploded. Bombings, threats, and potential naval confrontations sent oil spiking from $67 to $76 per barrel. Iran’s Parliament passed a motion to close the Strait of Hormuz which handles 20% of global oil supply. The Dallas Fed modeled a scenario where Strait closure could drive oil to $100 per barrel.
But then a ceasefire was announced, and oil retreated . The “geopolitical risk premium” evaporated almost as quickly as it appeared.
In October, the US Treasury banned trading with Rosneft and Lukoil, which together account for half of Russia’s oil production. The EU pursued even more aggressive sanctions, designating nearly 900 additional Russian entities in 2025 alone the most active sanctions year since the war began. Russia’s fossil fuel export revenues collapsed to just €524 million per day in October, the lowest level since the invasion. Russia’s budget deficit hit $100 billion.
In December, the Trump administration seized Venezuelan tankers and effectively blockaded Maduro’s oil exports. More than 30 of the 80 ships in Venezuelan waters operate under US sanctions. Venezuelan crude exports, which had recovered to 1.2 million bpd, faced collapse.
Yet despite all of this Iran tensions, Russian sanctions, Venezuelan blockades oil prices stayed depressed. Why?
Because the fundamental supply-demand balance overwhelms geopolitical disruption risks. The 2.7 million barrel per day surplus is simply too large for even major geopolitical events to eliminate. When you have a fear of oil glut, risk premiums don’t stick. Markets look through the noise and focus on the underlying surplus.
But here’s the critical insight: these geopolitical pressures are reducing future supply capacity without affecting current demand! Russian production is being constrained by sanctions. Venezuelan output is being blockaded. Iranian exports remain under pressure. OPEC+ members are holding back production to support prices, even as they fail to lift them.
All of this sets up the supply deficit of the late 2020s. When the supply base will have eroded precisely when we need it most. The geopolitical events of 2025 aren’t showing up in prices now, but they’re shaping the supply landscape.
So let’s pull it all together, because this is where the story becomes one unified narrative :
