Investing.com – In its ‘2025 Energy Outlook’ report released on Thursday, Jefferies analysts highlighted ten critical questions shaping the global energy landscape driven by policy changes, market dynamics and geopolitical factors.
“2024 was a rollercoaster year for energy, with a significant spread being the defining feature of the group,” analysts led by Lloyd Byrne said in the note. “We believe 2025 will be similar, with US deregulation and global demand growth being the primary drivers of sub-sector performance.”
1)’Can “Trump Trade” Continue?:’ Jefferies notes that investors expect gains from “demand pull” (netgas) and for LNG under the new administration. The “drill baby drill” will likely have limited impact as shale matures and operators focus on returns.
The outlook for netgas infrastructure remains bullish as improved permitting and development could boost growth.
“In our view, the regulatory push for North American natural gas fundamentals is ultimately positive,” the analysts noted. “Investors continue to inquire about upstream, services and midstream options to consider.”
2)’North American Natural Gas – Volatility, LNG and Demand Centers:’ LNG demand is expected to tighten gas storage in winter 2025-26. Jefferies predicts infrastructure bottlenecks causing price distortions as supply outstrips demand. Appalachia and Haynesville are positioned to benefit as demand for power and data centers increases.
3)’Global oil Macro (BCBA:): Non-OPEC Supply, Politics and Iran vs. Demand:’ Jefferies projects non-OPEC+ supply growth to 2025 to match global demand growth.
China and India are predicted to contribute significantly to the demand. However, geopolitical risks surrounding Iran could disrupt markets, with possible US sanctions on Iranian exports impacting supplies.
“Any shortfall in Iranian exports could be offset by an increase in OPEC+ supply, reducing the overhang of excess capacity,” the analysts added.
4)’The Future Role of US Oil: Shale Maturity or Growth?:’ Oil sentiment is “as usual negative” based on CFTC positioning.
While oversupply remains a concern, Jefferies sees potential stabilization if Iranian barrels are removed from the market. US manufacturing growth is slowing, with attention shifting to shareholder returns.
5)’LNG Outlook: Oversupply Thesis Pushed to the Right?:’ According to the Jefferies report, the LNG balance is tightening due to project delays and higher-than-expected demand.
The investment bank highlights the possibility of higher prices driven by European and Asian gas demand. After 2025, additional supply from the US, Qatar and Canada could ease the market.
6)’Global Refining S&D: What Happened to the High Mid-Cycle?:’ Jefferies expects global refining supply and demand (S&D) to tighten marginally in the second half of 2025. Growth will be offset by capacity closures in Asia Pacific, leading to a tighter clean product balance.
7)’Energy M&A: What shift are we in?:’ Consolidation continues within the E&P sector, with room for more activity. Jefferies sees opportunities for midstream and oilfield services to follow suit, driven by capital optimization and mature basin restructuring.
8)’Midstream: Still Many Interests – Remaining a Safe Haven?Midstream remains a defensive play, with strong volume growth from LNG and power demand. Jefferies highlights infrastructure projects in major basins such as the Permian and Appalachia for continued interest in the sector.
Jefferies analysts asserted, “We expect midstream to continue to attract investor attention as production continues to increase, limiting exposure to next month’s price volatility due to limited North American storage volumes.” as a way to invest in growth.”
9)’Shipping: Will the U.S. Enforce Iran Sanctions More Strictly?:’ Jeffries flags the US’s “shadow fleet” sanctions as a key issue. Stricter enforcement could remove tankers from the market, increasing spot rates and utilization.
“Should the 85 very large crude carriers (VLCCs) on the watch list be removed from the market under stricter enforcement, we could see overall tanker utilization increase from 85% to 95%, leading to an overall And spot rates for VLCCs and tankers have increased.” The report states.
10)’International Capex – Will it meet expectations?:’ Offshore capex is forecast to increase in 2025, albeit at a slower pace. Investor concerns remain heightened as growth slows, but Jefferies expects growth driven by global energy demand to pick up.
