2026 outlook: Oil prices soften and renewables grow

In its January 2026 Short-Term Energy Outlook, the U.S. Energy Information Administration projects a period of softening oil prices and modest shifts across U.S. energy markets.

Brent crude is forecast to average $56 per barrel in 2026, down 19% from 2025 as global oil production continues to outpace demand and inventories rise. Retail gasoline prices are expected to follow this trend, declining to an average of $2.92 per gallon in 2026. Natural gas prices are set to remain relatively stable at $3.46 per million BTUs.

On the production side, global liquid fuels output is set to increase by 1.4 million barrels per day in 2026, driven largely by OPEC+ supply growth. In the United States, crude oil production may plateau after reaching a record in 2025, as lower prices slow drilling activity. U.S. liquefied natural gas exports are set to expand by 7%, reflecting both domestic capacity growth and strong international demand.

The U.S. energy mix continues a gradual shift toward lower carbon sources. Natural gas remains the dominant fuel for electricity generation at 39%, while coal is falling to 15%. Renewables continue climbing, as wind holds at 11% and solar rises to 8%. Nuclear energy increases to 19%. U.S. CO₂ emissions are projected to decline slightly. Overall, the outlook depicts a system adjusting to lower oil prices, slower production growth, and steady expansion of clean energy.

For logistics, the report signals lower fuel costs as well as shifting energy-related freight flows. Easing gasoline prices offer cost relief, but volatility may linger. Rising natural gas exports and continued renewable energy buildouts will drive steady demand for project freight and specialized freight transportation capacity. Shippers aiming to lower their emissions need credible emissions measurement and can pursue alternative fuel options.

AI companies seek their own power sources

An electricity shortage is looming in the United States as demand, driven in large part by AI data centers, is projected to outpace supply by 2030. Companies looking to protect their power supply are beginning to integrate their own power production.

Whether it’s Alphabet’s acquisition of Intersect Power, OpenAI’s partnership with solar infrastructure company SB Energy, or data center operators building on-site power plants and solar farms, AI companies are looking for ways to stay ahead of a potential electrical power crunch.

As corporate users plot out these strategies, keep in mind that large-scale power investments bring specific project management and transportation needs. For instance, lead time for industrial breakers, transformers, and other hardware has increased significantly.

Global solar installs slow down

This year may be the first in two decades that new global solar installations slow down, with a projected total of 649 gigawatts added, versus 655 in 2025. The pace of growth is expected to pick up again in 2027.

The slowdown is closely tied to policy changes in the United States and China. The Solar Energy Industries Association (SEIA) predicts that more than 500 renewable energy projects—accounting for 117 gigawatts of capacity, or half of the new installations already under way—are threatened by the policy changes.

Yet growth in renewables continues, and solar continues to be the fastest and most cost-effective way to add energy production.

Caution on Venezuelan oil

Although the removal of Venezuela’s president in January 2026 has raised speculation about a revival of Venezuela’s oil industry, major foreign investment remains cautious. Venezuela is working to attract private capital, but experts warn that political instability, legal uncertainty, and the decayed state of oil infrastructure will likely delay large‑scale commitments.

Venezuela’s heavy, sour crude is costly to extract and refine, especially with prices below the break-even point of $85 per barrel. While long‑term potential exists, analysts agree that a meaningful production rebound will take years rather than months.

Tariff updates

No new U.S. tariffs have taken effect since November 2, 2025, underscoring the gap between policy discussions and actual implementation. In the coming months, two big issues have the potential to change the trade environment again or give companies breathing room to optimize their sourcing strategies:

• A Supreme Court decision will determine whether the U.S. administration was justified in invoking a national emergency to levy certain tariffs and whether these tariffs will stand or possibly be refunded. Court watchers expect the decision in the second half of February at the earliest. The case pertains to global reciprocal tariffs and tariffs intended to stop the flow of illegal drugs, such as the 10% tariff on certain Canadian energy imports. The case does not pertain to tariffs on specific commodities such as steel, aluminum, and copper used in energy infrastructure that were levied under a different type of authority.
• U.S.-Mexico-Canada Trade Agreement (USMCA) review is under way. These negotiations may result in changes to the North American trade deal, likely mid-year.

Other developments of note:

• The U.S. administration announced it may raise tariffs on South Korean imports, saying that country has not lived up to its end of the trade deal made in 2025. It’s important to note this is an ongoing policy discussion and has not progressed to implementation. Under the deal, Korea agreed to buy $100 billion in U.S. liquified natural gas and other energy-related products.
• A January 29, 2026, executive order gives the U.S. government the option to apply tariffs on goods from countries that sell oil to Cuba. This order does not by itself increase any tariff rates. Mexico is the primary country that could be impacted.
• Mexico’s new tariffs took effect on January 1, 2026. The tariffs target Asian—mainly Chinese—imports, with 5–50% rates.
• Canada’s 50% steel surtax on goods from countries without free trade agreements, most notably China, took effect on December 26, 2025.

For more information, including news of a U.S.-India trade deal, go to the Trade Policy & Customs section of this report.

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