This week’s developments highlighted the growing complexity of global energy markets as geopolitical tensions, regulatory shifts, and climate policy continued to reshape commodity flows and investment priorities. Energy prices stabilised amid easing political risk, while carbon markets began to show tangible regional impacts from CBAM implementation. At the same time, renewable generation milestones underscored the accelerating transition, even as infrastructure constraints and policy fragmentation remained persistent challenges.

Macroeconomics and Energy Markets

Oil prices steadied as tensions surrounding Greenland eased and geopolitical risks in Iran subsided, helping stabilise broader commodity markets. Brent hovered around $65 per barrel while WTI traded near $61. This stabilisation came despite mounting concerns over a potential global supply glut driven by rising OPEC+ output and expanding Venezuelan exports. Higher US crude inventories also weighed on sentiment, while the planned restart of Kazakhstan’s Caspian Pipeline terminal added further near-term supply pressure.

Freight markets for Russian crude experienced renewed strain as new tankers entered the trade following sharp increases in shipping rates. Sanctions-related vessel shortages have driven freight costs higher, encouraging even modern tankers to participate in Russian exports, highlighting persistent structural constraints in sanctioned oil logistics.

In gas markets, US natural gas prices surged to their highest level since 2022 following an intense cold snap that raised concerns over freeze-offs in production regions. Futures rose more than 50% across two sessions, reflecting heightened fears of supply disruptions and a rapid drawdown of storage levels. The impact was felt globally, given Europe and Asia’s reliance on US LNG cargoes during winter demand peaks.

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Carbon Markets

CBAM implementation began to exert visible pressure on the EU’s Western Balkan neighbours, particularly in electricity trading. Despite proposed regulatory amendments aimed at easing compliance, the current framework is already reshaping cross-border flows, widening regional price spreads, and reducing export competitiveness. Market participants warned that the lack of differentiation between fossil-based and renewable electricity and unresolved technical guidance could create lasting structural distortions in regional power markets.

In the US, Washington State proposed significant reforms to its forestry offset protocol that would materially reduce project economics. Tighter baselines, increased buffer pool contributions, higher leakage deductions, and delayed issuance timelines could reduce present offset values by more than one-third, raising concerns over future investment appetite for forestry-based carbon projects.

Within voluntary markets, BioCarbon advanced efforts to align its biodiversity standard with international integrity frameworks. The move reflects increasing scrutiny of biodiversity credit methodologies and growing demand for internationally recognised certification aligned with emerging global principles.

Renewables and Biofuels

For the first time, wind and solar overtook fossil fuels in the EU electricity mix, accounting for 30% of total generation in 2025. Rapid solar deployment offset weaker hydro output, while coal’s share fell to record lows. Despite the milestone, grid constraints and insufficient storage capacity continued to drive curtailment and price volatility, reinforcing the urgent need for network investment.

China launched its first domestically built methanol bunkering vessel in Shenzhen, delivering green methanol to an oceangoing container ship. The development marks a major step in China’s strategy to establish low-carbon marine fuel infrastructure and strengthen its position in future shipping decarbonisation pathways.

At the World Economic Forum, Trafigura’s CEO emphasised that clean fuels such as sustainable aviation fuel and hydrogen will struggle to scale without mandates and subsidies, given their current cost disadvantage relative to conventional fuels. The comments reinforced the central role of regulatory frameworks in enabling energy transition investments.

Corporate Sustainability and Regulation

Allianz Global Investors reached the first close of its emerging markets climate finance fund, securing $690 million toward a $1 billion target. The blended finance structure aims to mobilise private capital into climate mitigation projects across clean energy, sustainable agriculture, and low-carbon infrastructure, with a strong focus on developing economies.

In regulatory developments, the European Commission urged unity after Greece joined a US and Saudi-led alliance opposing the EU’s net-zero shipping framework. The move has raised concerns about the bloc’s ability to maintain a coordinated position ahead of critical International Maritime Organization negotiations, potentially weakening Europe’s influence over future maritime decarbonisation standards.