The year 2025 marks a critical period in which global energy markets are shaped by geopolitical uncertainties. The energy policies of the new administration in the United States (US), ongoing trade tensions with China, conflicts in the Middle East, and the trajectory or post-war process of the Russia-Ukraine War will directly influence geopolitical dynamics. The global supply-demand balance will be determined by production strategies between OPEC+ and the US, while energy security policies and increasing protectionist tendencies further complicate the transition from fossil fuels to renewable energy. Additionally, the global economic slowdown and inflationary pressures introduce new risks to energy investments and market stability. In this context, 2025 emerges as a turning point where both geopolitical tensions and economic fluctuations will be decisive in the energy sector.
Geopolitical conflicts continue to be a significant source of uncertainty in energy supply. While the war in Ukraine continues to disrupt Europe’s energy security, rising tensions in the Middle East further weaken global energy security. Although the direct threats posed by the Russia-Ukraine War have begun to decrease as of 2023, the risk of supply disruptions remains high.[1] With elections taking place and administrations changing in both Europe and the US, fundamental shifts in energy policies are expected. Particularly, countries highly dependent on specific suppliers are likely to adopt more protectionist policies. However, structuring such protectionist policies is, in fact, the primary cause of energy vulnerability. For example, such restrictions slow the growth of critical supply chains, including solar photovoltaic (PV) systems and electric vehicle (EV) batteries. Additionally, developments in US-China relations under Donald Trump’s administration further increase uncertainties in global energy markets.[2]
China controls more than 80% of global solar PV production and between 75% and 90% of the processing of critical minerals, including cobalt and rare earth elements. As of 2024, two-thirds of the world’s electric vehicles are also produced in China. This concentration creates bottlenecks in supply chains and exposes other countries to geopolitical risks. For instance, China’s restrictions on rare earth element exports during diplomatic tensions with Japan[3]demonstrate how such dependencies can turn into vulnerabilities.[4]
Meanwhile, Europe’s efforts to diversify its natural gas imports from North Africa and the Eastern Mediterranean indicate a broader approach to energy security. Similarly, the US’s domestic investments under the Inflation Reduction Act (IRA) aim to reduce reliance on foreign clean energy production. However, whether US Energy Secretary Chris Wright can continue implementing this law, initiated during Biden’s term, remains a significant uncertainty. Without international cooperation, such global energy initiatives risk becoming fragmented and losing their effectiveness.
From an economic perspective, the possibility of US-imposed tariffs triggering a global trade war presents a major risk. Such developments could slow economic growth. Since trade barriers make central bank monetary policies more complex, how quickly developed countries can control inflation emerges as a critical question for the global economic outlook. Meanwhile, governments are expected to adopt policies to address growing budget deficits.[5] However, it is also essential to recognize the opportunities for developing countries to expand their national markets and enhance their capabilities. For instance, following strong growth in the oil and gas sector in previous years, global upstream investments are expected to increase by 2% worldwide in 2025, while countries like Mexico, Turkey, and Suriname are projected to see a 3% increase.
On the other hand, according to Rystad Energy forecasts, investments in shale and tight oil are expected to decline by approximately 8% in 2025 due to low activity levels and decreasing unit costs. Global oil demand is estimated to rise by around 1 million barrels per day. However, faster growth in non-OPEC production may lead to an oversupply in the market, exerting downward pressure on oil prices. Non-OPEC oil supply is expected to increase by approximately 1.4 million barrels per day, supported by shale oil and deepwater production. Additionally, natural gas liquids (NGL) and other liquid fuel types are expected to grow by more than 300,000 barrels per day in 2025.[6] In this context, the Trump-Putin meeting in Saudi Arabia could pave the way for increased cooperation among producers through this organization.[7]
Trump’s goal of deregulation and global leadership in the energy sector could accelerate US liquefied natural gas (LNG) exports. Streamlining approval processes and expediting infrastructure expansions could strengthen US oil and gas production and support LNG export growth. The Biden administration’s moratorium on approving new LNG projects for countries without a Free Trade Agreement (FTA) has tightened global LNG supply-demand balances in the medium term. Trump has promised to lift this restriction upon taking office, presenting a significant opportunity for developers with pending projects. However, accelerating these projects could lead to an oversupply in the LNG market, potentially disrupting global LNG balance if an “excessive, too early” scenario materializes. Furthermore, this could ignite energy wars by increasing competition with major LNG producers such as Qatar and Australia.[8]
In conclusion, most of the energy problems anticipated to be resolved in 2024 appear to have merely been postponed. While international cooperation in the 2010s paved the way for the green energy revolution, the increasing political shift to the right, coupled with growing migration issues, has made the protection of national borders and economies a necessity. Trump’s push for deregulation in US markets while increasing global economic regulations creates a contradiction. Additionally, the victory of Germany’s Christian Democratic Union (CDU) in elections signals a new phase for the European Union, which is set to become a key factor in shaping global energy policies.
[1] “World Energy Outlook 2024”, IEA, https://www.iea.org/reports/world-energy-outlook-2024, (Access Date: 24.02.2025).
[2] “Ourth-Quarter 2024 Edition: Change On The Horizon Sustainability Quarterly”, S&P Global, https://www.spglobal.com/esg/insights/featured/sustainability-journal/fourth-quarter-2024-edition, (Access Date: 24.02.2025).
[3] “How China’s trade war playbook could avoid Japan’s mistakes”, Mynews, https://www.scmp.com/opinion/china-opinion/article/3299102/how-chinas-trade-war-playbook-could-avoid-japans-mistakes, (Access Date: 24.02.2025).
[4] “How do China and America think about the energy transition?”, Brookings, https://shorturl.at/VpYCj, (Access Date: 24.02.2025).
[5] “Trump Tariffs: Tracking the Economic Impact of the Trump Trade War”, Tax Foundation, https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/, (Access Date: 24.02.2025).
[6] “Shaping energy markets in 2025: 12 trends to watch in the year ahead”, Rystad Energy, https://www.rystadenergy.com/news/energy-2025-trends-forecast, (Access Date: 24.02.2025).
[7] “The geopolitics that will shape energy markets in 2025”, Capital Economics, https://www.capitaleconomics.com/publications/commodities-update/geopolitics-will-shape-energy-markets-2025, (Access Date: 24.02.2025).
[8] “Countries with largest liquefied natural gas (LNG) export capacity in operation worldwide as of September 2024”, Statista, https://www.statista.com/statistics/1262074/global-lng-export-capacity-by-country/, (Access Date: 24.02.2025).
