Energy Intelligence’s latest Macroeconomic Outlook focuses on growing risks facing the global macroeconomy for the remainder of 2025 and into 2026. The US is likely to bear the brunt of these impacts as inflation ticks up, the dollar falls and the economy – and the job market – cool. Prospects in countries with close US trade linkages will also take a hit. While the US reached deals with many Asian countries, progress on a more permanent deal with Beijing remains uncertain, while tensions with India flare. The uncertainty is weighing on commodity prices – including oil and gas – which will harm producers in the Middle East, Latin America and Africa.

US President Donald Trump is advancing his protectionist trade agenda. Tariffs for many countries without an agreement are rising beyond those proposed in April, while many deals include rates above pre-Trump levels. Washington is also putting forward new sectoral tariffs and expanding their use to advance geopolitical goals. We expect extended uncertainty as questions about the duration and scope of tariffs swirl. The impacts – including increased inflation and lower job growth – will rise over the course of the year. Many deals aim to boost US energy exports and investment, but the viability of these provisions is questionable. Other policies, like steel tariffs, will weigh on the sector.

The One Big Beautiful Bil Act (OBBBA) enshrines the energy policy sea change under President Donald Trump. Low-carbon tax credits – like solar, wind and electric vehicles (EVs) – will be unwound more quickly or eliminated, hitting the beleaguered offshore wind and EV sectors hard. Yet, CCS tax credits were enhanced – boosting blue hydrogen – while nuclear, geothermal and sustainable aviation fuel credits were extended. In the traditional hydrocarbon space, the OBBBA mandates new leasing on federal lands, with a particular focus on Alaska and the Gulf of Mexico. It also lowers royalty rates and restores the full intangible drilling cost deduction, providing a welcome boost to the oil industry.

The international geopolitical and economic order is changing. So, too, is the global energy system. These two trends are interdependent: Geopolitics is affecting the pace and shape of the energy transition, and the energy transition is recasting the international order. In this special report, Energy Intelligence explores how the energy transition is changing alliances, recalibrating trading patterns and supporting the rise of new powers. We consider whether the geopolitical reordering will speed or slow the transition. And we examine the strategic divergence of China, the EU and US as they respond to these intersecting trends. Finally, we offer specific recommendations to help companies, investors and governments navigate the increasingly complex geopolitics of energy.

China’s macroeconomic outlook is growing gloomier at a time of major internal structural change, with key energy market implications. Trade tensions, its flagging property sector and slowing infrastructure investment are undermining China’s traditional economic foundations, while its low carbon technology prowess cannot cover these losses. These dynamics are weighing heavily on oil demand, as reduced freight demand, rising EV adoption and the slowing economy take their toll, with petrochemical feedstock usage unable to pick up the slack. Accordingly, we see Chinese oil demand growth barely topping 100,000 b/d this year and next. While natural gas demand prospects are brighter, they are not immune from these trends.

This Quarterly Risk Outlook examines the major investment, geopolitical and energy transition-related risks shaping the global oil and gas operating environment in this quarter and beyond. The implications of the latest twists in Libya’s long-running political crisis – including the impacts on investor interest in its first bid round in 17 years – and the Labor Party’s overwhelming victory in Australia are examined in depth. Meanwhile, evolving risks throughout the Middle East – including updated post-ceasefire Israel-Iran scenarios – headline geopolitical risks in this report. Key energy transition risks include the rollback of significant parts of the hallmark Inflation Reduction Act in the US.

The air campaign between Israel and Iran represents the most intense fighting seen in their decades-long rivalry. Energy Intelligence forecasts three conflict scenarios and energy sector implications. While a short, intense air campaign remains a distinct possibility, the odds the conflict expands – including US involvement – is growing. Domestic energy assets, such as refineries and gas production facilities, have been hit. If the fighting escalates, the likelihood of an Israeli attack on Iranian export infrastructure or Tehran interfering with shipping in the Strait of Hormuz will rise. In this case, the oil and gas market impacts would be painful, especially in the near-term, but the exact impact will depend on the scale and duration of any disruption.

Risk Research and Opec-Plus Monitor have published a joint report on risks and market factors driving Opec-plus strategy. Energy Intelligence’s latest proprietary external break-even oil price outlook now sees Opec-plus producers’ average external break-even price at $60.92/bbl in 2025, lower than our previous expectation of $66/bbl. The adjustment largely reflects accelerated supply additions, which are mitigating the impact of lower prices. The group’s strategy shift is driven by several variables, led by internal frustration at some members’ overproduction. We see the group’s course as also guided by a shift in its attitude toward price, internal pressure to unwind and a desire to defend market share.

US President Donald Trump’s hardline approach to Venezuela has resulted in the revocation of operator licenses – both for onshore and cross-border offshore operations with Trinidad – and possible imposition of secondary tariffs. Energy Intelligence scenarios point to three possible pathways for Venezuela’s sanctions and oil production outlook. The base “Caracas Adapts” scenario sees Venezuela weather another round of sanctions, while continuing exports (at steep discounts). If Trump and President Nicolas Maduro reach some sort of agreement, or if broad US sanction waivers are extended, a modest production recovery is possible. Yet, with even tighter sanctions enforcement and tariffs, production could fall to 600,000 b/d by end-2026.

The Canadian Liberal Party – led by new Prime Minister Mark Carney – won last month’s elections fueled by backlash to US President Donald Trump’s trade policies and attacks on Canadian sovereignty. US trade tensions are weighing heavily on growth, with Carney likely to turn to Asia and Europe to diversify export options. Carney also gave vocal support for the hydrocarbon sector, vowing to build out new infrastructure and expedite reviews, and the prospects for new pipelines and LNG export facilities could rise. Yet, he will continue efforts to fight climate change, while the industry still faces many hurdles to build out infrastructure – including new trade war-related risks – which could dampen enthusiasm.