Global energy flows are realigning as Asian economies ramp up traditional fossil fuel consumption and European markets struggle to secure sufficient liquefied natural gas inventories. Meanwhile, the Russian domestic market is resorting to strict physical rationing to manage a severe and widening fuel deficit.
Global market
TotalEnergies is actively offering millions of barrels of Iraqi crude for prompt delivery to Asian buyers, compounding an already well-supplied regional market. In Japan, gas-fired power generation fell by 16% to 17.3 terawatt-hours in June, while coal usage increased by 4.6% as utilities chased cheaper alternatives to elevated liquefied natural gas prices. Similarly, India experienced a 14% surge in coal-powered electricity generation, reaching 120.20 billion kWh, while the nation’s gasoline sales climbed 7% year-on-year in June to 3.77 million metric tons.
Despite improving tanker traffic through the Strait of Hormuz—with 40 vessels transiting the critical waterway on Monday—OPEC+ nations are expected to add supply by increasing production targets by 188,000 barrels per day in August. Concurrently, the Canadian government approved a new 1 million barrels per day Pacific pipeline to broaden Asian market access and reduce structural reliance on the US.
Russia & CIS
The domestic fuel crisis in southern Russia has escalated into severe physical rationing. Filling stations in Novorossiysk have completely halted free retail sales, servicing only corporate fuel cards, while the ATAN network in Sevastopol restricted available premium fuel to just 100 vehicles per station. Law enforcement in Krasnodar has also begun arresting black-market speculators attempting to sell stockpiles of gasoline at heavily inflated prices. Furthermore, Ukrainian military strikes caused widespread power and water outages across the Belgorod region.
These logistical breakdowns are triggering macroeconomic alarms. The head of the Russian Union of Industrialists and Entrepreneurs, Alexander Shokhin, publicly urged the Central Bank of Russia not to hike borrowing costs in response to the fuel shock, advocating to maintain the key rate at 14.25% on July 24. Meanwhile, the European Union reported its lowest gas storage injection rates in 1.5 months after losing bidding wars to Asian buyers, forcing the bloc to increase its imports of Russian liquefied natural gas to balance its grid.
Armenia
The structural vulnerabilities of EAEU energy supply chains are intensifying risks for Armenia, as extreme fuel rationing and infrastructure strikes in southern Russian regions threaten the stability of critical imports. Compounding these inflationary pressures, international market price assessments indicate renewed upward momentum, with the Brent crude benchmark climbing to $72.24 per barrel.
Broader geopolitical instability continues to cast a shadow over Yerevan’s energy security corridors, as the White House expressed serious concerns that Israel might attempt to physically eliminate Iranian negotiators during recent diplomatic engagements. On the diplomatic front, International Atomic Energy Agency Director General Rafael Grossi announced expectations to gain crucial access to Iranian nuclear sites within weeks, a development that could heavily influence regional stability and the viability of alternative Middle Eastern transit routes.