Energy security in focus as trade tensions and geopolitics intensify supply, demand risks

Several nations are gathering to discuss energy security in London April 24-25, as trade disputes triggered by US President Donald Trump's return to office add to existing oil and gas supply and demand uncertainty caused by war, cyberattacks and climate risks.

Energy security has risen up the agenda in recent years, with Russia's full-scale invasion of Ukraine and conflict in the Middle East disrupting oil and gas supply and changing global trade flows.

"What is truly unique about the impact on the energy security landscape globally via Trump is the way that the Trump administration has weaponized traditional tools of economic statecraft in a seemingly unpredictable manner to create global uncertainty," said Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University SIPA.

The Summit on the Future of Energy Security, organized jointly by the International Energy Agency and the UK government, hopes to get countries to collaborate more on energy security with the possibility of a global cooperation pact.

Michael Bradshaw, Professor of Global Energy at the Warwick Business School, said oil and gas markets were in a “precarious situation” with both geopolitical and economic risks at play.

“We are in very uncertain territory when it comes to what is likely to happen in the future … suddenly, we have both [risks] because everyone is concerned about trade wars and the impact that, that has on global economic growth,” Bradshaw said on a webinar.

War and peace

The success or failure of efforts to bring long-lasting peace agreements in Ukraine and the Middle East, as well as talks on Iran's nuclear program, could have a major impact on oil production and supply in the coming months.

However, OPEC+ policy, which has led to a leap in global spare oil production capacity, as well as fears about the impact of Trump's policies on global oil demand forecasts have reduced the price impact of these risks.

Platts, part of S&P Global Commodity Insights, assessed Dated Brent at $68.99/b on April 22 -- down from a post-Ukraine invasion high of $137.64/b on March 8, 2022.

The IEA, formed in 1974 to ensure oil supply security, has broadened its approach to cover all forms of energy.

However, it warns that oil supply disruptions are increasingly likely in the coming decades due to heightened supply-demand imbalances, greater concentration of crude and oil product supplies, uncertain geopolitical conditions, and rising risks from cyberattacks and extreme weather events.

Since 1991, the IEA has coordinated five collective responses to major oil supply disruptions, most notably in 2022 when it released over 180 million barrels of oil stocks in response to the market turmoil following Russia's invasion of Ukraine.

Demand forecasts, supply risks

Trade tensions have led to many agencies revising oil demand forecasts downward, which could ease some energy security concerns and put pressure on oil prices.

The IEA now sees world oil demand growing by just 730,000 b/d in 2025, roughly two-thirds of its previous forecast, to reach 103.5 million b/d due to a "paradigm shift in the global economy".

Analysts at Commodity Insights forecast a world liquids demand growth of 1.2 million b/d and crude oil demand growth of 375,000 b/d in 2025. However, full implementation of threatened tariffs could reduce liquids demand growth by as much as 500,000 b/d and crude oil demand growth by up to 250,000 b/d.

Crude output in Russia has dropped significantly since it invaded Ukraine, falling 1.11 million b/d from January 2022 to March 2025, according to the monthly Platts OPEC+ Survey.

However, that has been offset by rising output in Iran and Venezuela as the focus of sanctions switched to Russia. Iran and Venezuela increased totaling a combined 1.05 million b/d in the same period.

A peace deal could free Russia from some sanctions, but analysts see OPEC+ policy as likely to have a bigger impact on production levels than sanctions in 2025.

While conflicts continue to rage, the risk of major supply outages continues. Ukraine has prioritized attacking Russian oil processing, storage and supply infrastructure, while Iran-backed Houthi fighters have seriously disrupted shipping in the Middle East.

Gas security

Energy security in Europe was thrown into turmoil by the war in Ukraine, as Russian gas supplies dropped sharply.

The benchmark TTF month-ahead gas price hit an all-time high of Eur319.98/MWh ($351/MWh) on Aug. 26, 2022, putting European economies and energy policymakers under pressure. Prices have come down since but remain historically high, with the end of Russian gas supplies via Ukraine to Europe on Jan. 1, 2025, adding renewed price pressure.

Platts, part of S&P Global Commodity Insights, assessed the Dutch TTF month-ahead price at Eur34.04/MWh on April 22.

It remains to be seen whether peace talks over Ukraine could result in the return of any lost Russian gas deliveries into Europe.

Germany was among the countries worst hit by the cutoff in Russian gas supplies, prompting Berlin to fast-track the development of floating LNG import terminals to offset the lost pipeline gas from Russia. Others in Europe also rushed to deploy new LNG import infrastructure, including Italy, the Netherlands, and Finland.

The European Commission also brought in new gas supply security regulations, notably in gas storage. Under rules introduced in the summer of 2022, EU member states were obliged to fill their gas storage facilities in line with specific targets.