2026 Energy Landscape Reshaping: Structural Differentiation in the Era of Surplus, Three Key Variables Investors Need to Master

The energy market has sent a clear signal by 2025 — Brent crude oil has fallen nearly 20% since the beginning of the year to $60 per barrel, and the global oil and natural gas markets are entering a new phase of “oversupply.” According to IEA analysis, global oil supply in 2026 will exceed demand by 3.85 million barrels per day. This surplus wave exerts long-term pressure on oil and gas prices, but the performance of different energy categories shows significant divergence — diesel prices are rising against the trend, LNG faces intensified competition, and renewable energy growth is slowing but its strategic importance is increasing.

The Oil Market Enters the Era of “Inventory Inflation”

Production in the US, Canada, Brazil, and Guyana has hit record highs, and OPEC+ is gradually lifting production cuts (expected to be completed by the first half of 2026). The pace of global oil supply expansion far exceeds demand growth. China’s strategic reserves replenishment (about 500,000 barrels per day) and crude oil inventories at sea have risen to their highest levels since April 2020, making inventory pressure an invisible killer for oil prices in 2026.

The IEA’s surplus forecast (3.85 million barrels/day, about 4% of global demand) diverges sharply from OPEC’s “roughly balanced” judgment, reflecting market uncertainty. Without major geopolitical risks acting as catalysts, Brent crude oil prices may fluctuate long-term in the $55-70 range, with inventory accumulation becoming the main driver for downward price breakthroughs.

Explosive Growth in LNG Supply: Cost Competition Heats Up

Between 2025 and 2030, global LNG export capacity will increase by 300 billion cubic meters per year, a 50% growth, with the US contributing 45% of the new capacity. Australia, Qatar, Mozambique, and others are also actively expanding. Europe previously experienced demand surges due to replacing Russian natural gas, but the overall oversupply situation will suppress spot prices, especially in Asian and European markets.

US natural gas producers’ profit margins are under severe pressure, and some operators may face reduced production or delayed investment decisions. However, from the consumption side, low energy costs benefit downstream industries such as data centers and industrial electrification. LNG’s competitive advantage over oil and coal will also be enhanced.

Diesel and Refined Products: Structural Strength Amid Surplus

Despite downward pressure on crude oil prices, diesel margins are rising against the trend — in 2025, Europe’s diesel margins increased by 30%, far exceeding the decline in Brent crude oil. This contrast stems from ongoing attacks on Russian refineries by Ukrainian drones, EU bans on Russian-origin fuel imports, and limited new refining capacity investments worldwide.

Even if geopolitical conflicts ease in 2026, refining supply bottlenecks may persist. The relative strength of diesel and other refined products will become a “safe haven” in the energy market. This structural divergence means investors cannot simply track oil prices but must pay attention to supply-demand differences in specific products.

Why Renewable Energy Will Be a Key Variable in 2026

The forecast for renewable energy installations in 2030 has been revised downward by 248 GW, mainly due to policy adjustments in the US and China, but this is not a sign of renewable energy stagnation. Costs for solar, wind, and battery storage continue to decline, but oversupply during peak periods (especially midday solar peaks) has intensified.

Electricity demand is expected to grow at an average of 4% annually until 2027, driven by data centers, economic electrification, and AI computing needs — these emerging demand peaks often occur at different times than solar peaks, leading to more volatile electricity prices. Although the share of renewables is slowing in overall energy structure, their strategic position is rising, especially as long-term substitutes for fossil fuels will only strengthen.

Capital Flows Reflect Market Confidence Divergence

Western oil giants (Chevron, ExxonMobil, TotalEnergies, etc.) are expected to cut capital expenditures by about 10% in 2026, driven by short-term price pressures and shareholder return demands. In contrast, Middle Eastern oil-producing countries are actively expanding upstream investments, indicating significant differences in outlook among different camps.

Periods of downturn often create acquisition opportunities — Western giants, with strong balance sheets, may seize low-cost assets to prepare for a recovery in the late 2020s to early 2030s. This capital divergence trend is an important signal for long-term market turning points.

Investment Decision Framework for 2026

The core contradiction in the energy market lies in: short-term oversupply pressure(pressuring oil and gas prices) versus long-term structural demand(for electricity, electrification, and AI). Brent crude oil may experience range-bound fluctuations, but refined products and renewable energy-related assets will show differentiated performance.

Policy trends of OPEC+, forecast divergences between IEA and OPEC, and OECD inventory data should be key monitoring indicators. While geopolitical risks exist, structural supply-demand imbalances will play a more decisive role. Investors need to shift from a single commodity mindset to a portfolio approach, precisely allocating exposure to crude oil, natural gas, refined products, and renewable energy assets.