Investing.com – In their “Energy Outlook 2025” report released Thursday, Jefferies analysts highlighted ten critical questions shaping the global energy landscape, driven by policy shifts, market dynamics and geopolitical factors.
“2024 was a volatile year for energy, with high dispersion being the hallmark 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 main drivers of sub-sector performance.”
1)'Will the “Trump trade” continue?Jefferies notes that investors expect benefits for natural gas and LNG from “demand pull” under the new administration. The “Drill Baby Drill” will likely have limited impact as shale matures and operators focus on returns.
The outlook remains optimistic for natural gas infrastructure, where improved permitting and development could drive growth.
“The push for deregulation is ultimately positive for North American natural gas fundamentals, in our view,” the analysts noted. “Investors continue to inquire about upstream, servicing and midstream options to consider.”
2)'North American Natural Gas – Volatility, LNG and Demand Centers: Demand for LNG is expected to reduce gas storage as the winter of 2025-2026 approaches. Jefferies expects infrastructure bottlenecks to lead to price imbalances as demand exceeds supply. The Appalachian and Hinesville regions are positioned to benefit from growing demand for energy and data centers.
3)'Global oil Macro (BCBA:): Non-OPEC supply, politics and Iran versus demandJefferies expects that non-OPEC+ supply growth in 2025 will match global demand growth.
China and India are expected to contribute significantly to the demand. However, geopolitical risks surrounding Iran could disrupt markets, with potential US sanctions on Iranian exports impacting supply.
“Any decline in Iranian exports is likely to be offset by an increase in OPEC+ supplies, partially alleviating excess spare capacity,” the analysts added.
4)'The future role of US oil: shale maturity or growth?:' Oil sentiment is 'as negative as ever' based on CFTC positions.
While oversupply remains a concern, Jefferies sees potential stabilization if Iranian barrels are removed from the market. US production growth is slowing, as the focus shifts to shareholder returns.
5)'LNG Outlook: Has Oversupply Theory Pushed to the Right?:' According to the Jefferies report, LNG reserves are shrinking due to project delays and higher than expected demand.
The investment bank highlights the possibility of higher prices, driven by European and Asian demand for gas. After 2025, additional supply from the United States, Qatar and Canada could ease the market.
6)'Global Refining S&D: What happened to the upper intermediate cycle?:' Jefferies expects global refining (S&D) supply and demand to contract marginally in the second half of 2025. Capacity closures across the Asia-Pacific region will offset additions, tightening clean product balances.
7)'Energy Mergers and Acquisitions: Where Are We?:' Consolidation continues in the exploration and production sector, with room for further activity. Jefferies sees opportunities for transportation and oilfield services to follow suit, driven by capital optimization and restructuring of mature basins.
8)'Midstream: There is still a lot of interest – is it still a safe haven?Midstream operations remain a defensive play, with strong growth in LNG volume and energy demand. Jefferies highlights infrastructure projects in major basins such as the Permian and Appalachia as drivers of continued interest in the sector.
“We expect carriers to continue to attract investor attention as a way to invest in volume growth while limiting exposure to price fluctuations in the first month due to limited storage in North America as production continues to rise,” Jefferies analysts emphasized.
9)'Shipping: Will the United States implement sanctions on Iran more stringently?Jeffries points to US “shadow fleet” sanctions as a key issue. Stricter enforcement could take tankers out of the market, boosting spot rates and usage.
“If the 85 very large crude carriers (VLCCs) on the watch list are removed from the market under stricter enforcement, we could see overall tanker utilization jump from 85% to 95%, causing a jump in crude tanker spot rates.” Giants and tankers in general. The report states that.
10)'International capital expenditures – are they meeting expectations?:' External capital expenditures are expected to rise in 2025, albeit at a slower pace. Investor concerns remain as growth slows, but Jefferies expects gradual increases driven by global energy demand.
