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Global energy markets in 2025 were largely driven by geopolitical developments, as wars, sanctions and policy decisions reshaped oil and gas flows, while renewable energy continued to expand at a rapid pace worldwide.
Russian gas transit to Europe via Ukraine ended on Jan. 1 after the transit agreement expired and Ukraine declined to renew it, while the expansion of US sanctions targeting Russia's oil trade, and Washington's Feb. 26 move to revoke a license authorizing Chevron to operate in Venezuela were closely watched by markets.
On the supply side, eight members of the OPEC+ alliance, comprising Organization of the Petroleum Exporting Countries (OPEC) members and some major non-OPEC producers, moved to gradually unwind voluntary production cuts, a key shift that influenced global oil balances.
At the same time, strong growth in renewables underscored how the expansion of clean energy and adjustments in the fossil fuel market continued to evolve in parallel across the global energy system.
- Gas flows, sanctions and supply disruptions
A major turning point came at the start of the year when Russian gas flows via Ukraine halted on Jan. 1 after the transit agreement expired, effectively ending one of the remaining transit routes between Russia and the EU.
The move was followed by a sharp escalation in sanctions. On Jan. 10, the US Treasury imposed sweeping measures targeting Russia's oil trade, adding major producers Gazprom Neft and Surgutneftegas, more than 180 vessels, oil traders, oilfield service companies and energy officials to its sanctions list.
Energy logistics also came under strain in February as security risks in the Red Sea prompted some oil and LNG tankers to avoid the Suez Canal and reroute around the Cape of Good Hope, increasing shipping costs and delivery times for cargoes bound for Europe and Asia.
On Feb. 26, sanctions policy also shifted in Latin America, as US President Donald Trump said he would revoke a license that allowed Chevron to operate in Venezuela to sell oil on international markets, tightening US sanctions pressure on the OPEC member.
- Oil production policies
Supply-side dynamics were further shaped by decisions within the OPEC+ group. Beginning April 1, eight member countries started to gradually phase out voluntary production cuts totaling 2.2 million barrels per day, marking a cautious return of supply to global markets.
Upstream activity also gained momentum elsewhere. Libya launched its first international licensing round since 2008 in March, opening onshore and offshore oil and gas blocks to foreign companies in a bid to revive exploration and production.
In northern Iraq, the Kurdish Regional Government (KRG) said on Feb. 23 that it had reached an agreement with Baghdad to resume oil exports, raising expectations of renewed flows after a prolonged shutdown.
- Renewables continue rapid expansion
While oil and gas markets adjusted to geopolitical pressures, renewable energy growth remained one of the defining trends of the year. The International Renewable Energy Agency (IRENA) reported on March 26 that global renewable energy capacity increased by 15.1% in 2024, reaching 4,448 gigawatts, driven mainly by solar and wind installations.
Wind power set new records, with the Global Wind Energy Council (GWEC) on April 23 saying that global installed wind capacity rose by 117 gigawatts to 1,136 gigawatts. Offshore wind capacity alone reached 83 gigawatts by the end of 2024, reflecting strong growth in Europe and Asia.
Despite the rapid rise of renewables, natural gas demand continued to grow. The Gas Exporting Countries Forum (GECF) said on April 16 that global gas consumption climbed to a record 4.17 trillion cubic meters in 2024, largely driven by demand in Asia and the Middle East.
In parallel, global electricity demand continued to rise during the year, fueled by population growth, data centers, electric vehicles and increased cooling needs amid extreme heat events.
- Power outages raise grid resilience concerns in Europe
On April 28, concerns over grid resilience grew after a major blackout hit Spain and Portugal, disrupting daily life and transport. The outages renewed debate over whether networks can cope with rising demand, extreme weather and rapid renewables integration.
By mid-year, critical minerals were a growing focus in energy diplomacy, with the G7 launching a Critical Minerals Action Plan centered on diversifying supply chains.
Nuclear energy also returned to the spotlight. On August 8, Kazakhstan announced the official start of preliminary works of its first nuclear power plant in the Almaty region, marking a strategic step toward diversifying its energy mix.
On the policy front, from Nov. 10–21, 2025, leaders and delegates met at the United Nations COP30 climate summit in Belem, Brazil, where countries underscored the urgency of accelerating climate action, with discussions focusing on energy transition issues such as renewable energy, energy efficiency and efforts to mobilize greater climate finance for developing economies.
- US-Venezuela tension and Europe's move away from Russian energy
On Dec. 16, US President Trump ordered a "total and complete blockade" on all sanctioned oil tankers entering or leaving Venezuela, citing allegations that the country is financing narcotics-related terrorism.
While Venezuela accounts for a relatively small share of global oil supply, analysts say markets remain sensitive to any potential supply disruptions amid broader geopolitical risks, providing support to prices.
Toward the end of the year, the EU took decisive steps to reduce its dependence on Russian energy.
On Dec. 3, European Union institutions agreed on a plan to phase out imports of Russian natural gas and liquefied natural gas (LNG) by autumn 2027.
By Handan Kazanci
Anadolu Agency
energy@aa.com.tr
