Oil Prices Rise as U.S.-Iran Tensions Simmer
Oil prices rose by 1% early on Wednesday as the U.S.-Iran tensions continue to rise and Israeli Prime Minister Benjamin Netanyahu is set to meet U.S. President Donald Trump. In morning trade in Europe on Wednesday, the U.S. benchmark, WTI Crude, was up by 1.39% to $64.85 per barrel. The front-month futures traded at $64.85. The international benchmark, Brent Crude, traded very close to the $70 per barrel mark, as it was up 1.29% on the day to $69.69. This week, the U.S.-Iran tensions and negotiations have been in the spotlight, with the oil market assessing the chances of a deal. Israel’s Netanyahu said before departing for Washington, D.C., “I will present to the president our outlook regarding the principles of these negotiations.” Israel is expected to ask President Trump to seek a deal that would put an end to Iranian uranium enrichment, and limit its support for Hamas and Hezbollah. “The Prime Minister believes that any negotiations must include limiting ballistic missiles and ending support for the Iranian axis,” Netanyahu’s office said ahead of his trip to the U.S. President Trump has warned the U.S. could send a second aircraft carrier to the region if the talks fail. The ongoing tensions have supported oil prices this week, although they wobbled in Tuesday trade after the American Petroleum Institute (API) estimated that crude oil inventories in the United States increased by a whopping 13.4 million barrels in the week ending February 6. The estimated increased more than offset the prior week’s draw of 11.1 million barrels. Reports that the U.S. was considering seizing sanctioned tankers carrying Iranian oil have also pushed prices higher. But such an action with Iran “would be escalatory and would likely see the market needing to price in an even larger risk premium than it already is, given the potential for Iranian retaliation,” ING’s commodities strategists Warren Patterson and Ewa Manthey said in a Wednesday note.
China’s Clean Energy Boom Still Rests on Coal, Oil, and Gas
Over the past decade, China’s renewable energy and related clean technologies have emerged as the fastest-growing sectors of the economy, significantly outpacing the overall economy. Last year, China’s clean energy investments hit a record 7.2 trillion yuan ($1 trillion), with the sector accounting for over 11% of GDP and growing three times faster than the overall economy. Indeed, China’s “new three” namely solar, batteries, and electric vehicles contributed over 90% of the rise in the country’s overall investments. China continues to be particularly dominant in solar and wind energy technologies, with the nation installing 315 GW of solar and 119 GW of wind, exceeding the rest of the world combined. Still, fossil fuels remain critical to China’s energy security and industrial base, providing over 80% of primary energy and over 60% of electricity production. Coal is the ornerstone of China’s energy sector, providing over 50% of electricity generation and roughly 60-70% of total primary energy consumption. China consumes over 4 billion tons of coal annually, accounting for more than 50% of the entire world’s coal consumption. In 2023, data indicated that China’s coal consumption continued to rise, with imports reaching a record 474 million tons. This makes China the world’s largest coal consumer and importer. Despite massive investments in renewables, coal continues to play an outsized role in fueling the economy, ensuring energy security and powers industrial sectors like steel, with new coal-fired power projects continuing to be built at a rapid clip. Construction of new coal-powered plants hit a 10-year high in 2024, with the country initiating development of 94.5 gigawatts (GW) of new coal-power capacity and also resumed building of 3.3 GW that was previously suspended. The heavy reliance on coal has led to significant air pollution and carbon emissions, despite China’s President Xi Jinping pledging to “strictly control” coal expansion and “phase down” consumption. And oil, too, remains critical to China’s energy security and industrial growth, representing roughly one-fifth of its energy mix and powering transport and petrochemical sectors. China consumes approximately 16.3 to 16.4 million barrels per day (b/d) of oil, making it the world’s second-largest consumer. As of 2024, the country imported roughly 11.1 million b/d of crude oil to meet this demand, representing about 74% of its consumption. Projections for 2025 suggest total oil demand averaged around 16.74 million b/d. Russia, Saudi Arabia, and Iraq are China’s key suppliers of crude, with imports from Russia exceeding 2 million barrels per day (bpd), representing roughly 20% or more of China’s total imports. Around 900,000 bpd of Russian oil is delivered via pipeline, with the rest coming by sea, often using a “shadow fleet” to bypass Western sanctions. Not surprisingly, China is also aggressively expanding domestic oil production, with output reaching a record high of 4.3 million b/d in 2025 from 3.8 million b/d in 2020, thanks to intensified exploration, particularly in offshore and unconventional reserves. Offshore oil production is a major driver of China’s domestic oil production, accounting for over 60% of new output for five consecutive years in large part due to increased investment by state-owned companies, including CNOOC, CNPC, Sinopec. The push is part of the 2019-2025 “Seven-Year Action Plan” which focused on increasing upstream, domestic production to ensure energy security, even with the parallel push for green energy and electric vehicles. However, the high cost of extracting from mature fields means domestic output cannot keep pace with demand, leaving a large gap that must be filled by imports. Meanwhile, natural gas acts as a critical “bridge fuel” in China’s energy transition, helping to reduce reliance on coal, improve air quality and balance intermittent renewable energy. As the world’s third-largest consumer of natural gas, China is growing its natural gas usage for industrial, residential, and power generation, with projections indicating that gas will play a major role in achieving carbon neutrality. China’s natural gas consumption hit ~428 billion cubic meters (bcm) in 2024, marking a steady increase from 330 bcm in 2020. China relies on a mix of domestic production and imports, with demand driven largely by the industrial and city-gas sector. China’s imports of Liquefied Natural Gas (LNG) imports are projected to rebound in the current year, with projections of up to a 10% Y/Y increase to nearly 76 million metric tons, following a ~10% decline in 2025 due to high domestic production and weaker demand. China is the world’s largest importer of LNG, with Australia, Qatar, and Russia supplying the bulk of imports. China also imports large amounts of gas via pipeline, primarily from Russia and Turkmenistan via the Power of Siberia (Russia) and the Central Asia-China Gas Pipeline. That said, China is poised to maintain its dominance in the global clean energy sector not only due to heavy investments and technological leadership but also due to its rare earths hegemony. China maintains a commanding, near-monopolistic hold on the global rare earth elements (REEs) supply chain, controlling approximately 60-70% of mining and over 90% of processing and refining. Neodymium and dysprosium are essential for high-strength permanent magnets in electric motors, significantly increasing power density and efficiency. Permanent magnets (using neodymium, dysprosium, and praseodymium) are used in wind turbines to improve performance, particularly for offshore, direct-drive turbines that require no gearbox. While not used directly in PV modules, REEs like yttrium, lanthanum, and cerium are used in specialized solar inverters, sensors and converter components.
India’s petroleum reserves can last 74 days in case of global turbulence: Oil Minister Puri
India’s strategic petroleum reserve can last 74 days to meet the demand arising out of any global turbulence, Oil Minister Hardeep Singh Puri informed the Rajya Sabha on Monday. Replying to supplementaries during Question Hour, the minister said for any country like India, which is growing at a phenomenal pace, there must be a very viable and secure reserve, so that it is not in a vulnerable situation in the case of global turbulence. He said India has several refineries both in the West coast as well as the East. According to the International Energy Agency (IEA), today we are the world’s third largest consumer of crude oil. We have the world’s fourth largest refining capacity – currently around 260 million metric tonne per annum going on to 320 million metric tonne per annum. And, we are also the world’s fifth largest exporter of petroleum products.
US forcing India to buy LNG at exorbitant prices, says Putin aide on Trump’s moves against Russian energy
Russian Foreign Minister Sergei Lavrov on Monday accused the United States of trying to block India and other countries from buying Russian oil, Sputnik reported. Speaking in an interview with TV BRICS, Lavrov said Washington is using “coercive” measures such as tariffs, sanctions, and direct prohibitions to achieve economic dominance. Lavrov referred to the peace talks in Alaska last year and said the US had presented a proposal on Ukraine, which Russia accepted. “They (US) tell us that the Ukraine problem should be resolved. In Anchorage, we accepted the US Proposal. The US position was important to us. By accepting their proposal, we seem to have completed the task of resolving the Ukrainian issue and moving on to a dull-scale, broad-based and mutually beneficial cooperation. So far, the reality is quite the opposite. New sanctions are imposed, a ‘war’ against tankers in the open sea is being waged in violation of the UN Convention on the Law of the Sea,” Putin’s aide said.