Energy Musings - January 19, 2026
UNCTAD tracks global trade, including policies, trends, volumes, and transportation. They just published their analysis of 10 trends shaping 2026 trade. We look at those impacting energy.
Trade Patterns Are Shifting And Will Impact Energy Demand
The World Bank Group’s website contains a page on energy and “Understanding Poverty,” which begins the discussion with the following commentary.
“Energy is the lifeline of a modern economy and a foundation for development. Without energy, hospitals can’t operate, businesses can’t grow, and students can’t study after dark. Expanding access to reliable and affordable energy can raise living standards, safeguard essential services, create jobs, drive digitalization, and propel growth. 675 million people are without electricity; 450 million more have unreliable power. (Emphasis in the original.)
“More than a billion people around the world live in energy poverty. That means they don’t have adequate, reliable, and affordable energy for lighting, cooking, heating, and other daily activities. Most of them lack an electrical connection, and millions more suffer frequent power outages, equipment malfunctions, or gaps in their distribution network. The consequences are severe: When people lack access to energy, they are less healthy and are denied opportunities to improve their lives and lift themselves out of poverty; they are also less able to cope with climate change, natural disasters, and extreme weather events. Eight out of 10 people without electricity today live in remote, fragile, or conflict-affected regions.”
This is the World Bank’s argument for why the global economy needs more energy, and the justification for the Group’s lending for energy projects worldwide. From an international trade perspective, energy fuels (oil, natural gas, and their derivatives) account for roughly 40% of global shipping volumes. When we include the massive amounts of minerals required to electrify economies, energy fuels represent nearly two-thirds of shipping volumes. Therefore, we should pay attention to global trade, something the United Nations Commission on Trade and Development (UNCTAD) tracks and reports on.
In its latest report, “10 trends shaping global trade in 2026,” UNCTAD briefly discussed the trends. While the issues concern global trade, they also indirectly address energy demand, which we closely monitor.
UNCTAD summarized 2025’s global trade as setting a record by exceeding $35 trillion for the first time, a 7% increase from 2024. The organization expects trade growth to continue, but at a slower pace in 2026. The reasons why UNCTAD expects slower growth include geopolitical tensions, shifting supply chains, accelerating digital and clean energy transitions, and tighter national regulations, including tariffs and border carbon taxes. This litany of challenges for global trade will contribute to slower economic growth this year. The organization expects U.S. growth to slow to 1.5%, from 1.8% in 2025. It also believes China’s growth will slow from 5% to 4.6%, while Europe’s growth will remain “modest” despite hefty fiscal stimulus.
As is often the case with UN forecasts, its growth predictions assume the worst. We wonder whether this bias is to help the UN in its request for greater funds from member nations.
U.S. GDP rose by an astounding 4.3% in 2025’s third quarter. That rate is projected to be surpassed in the fourth quarter by the Atlanta Federal Reserve Bank’s GDP Now model, which calls for 5.3% growth. With the 3.8% growth in 2025’s second quarter, even with a 0.5% contraction in 1Q2025, the annual growth for last year will be about 3%, more than 50% above UNCTAD’s forecast. Additionally, the 2026 GDP estimates are around 2%, again substantially above the UN’s projection.
Will China’s economy grow faster than projected? What about the European Union? Last year, Europe’s performance was helped by Germany’s 0.2% growth, despite predictions of another recession. The growth, while small, was a welcome break from the three years of economic contraction. Germany is currently expected to continue its economic recovery this year, helping European Union growth expectations.
One of UNCTAD’s key points was that shifting trade patterns, driven by increased supply chain risk management, have changed certain trade relationships over the past two years. Company management is moving away from cost-driven supply chains toward risk-minimized ones.
How trade routes are shifting.
Companies are responding to increased geopolitical tensions and to government-imposed industrial and climate policies. In addition, technological change is driving adjustments to businesses that are necessitating increased supplier diversification, the relocation of production closer to consumer markets, and greater control over more of their supply chains.
UNCTAD says that nearly two-thirds of global trade takes place within company supply chains. Their reconfiguration is creating new trade hubs and routes. This change creates challenges for the global shipping industry, as 80% of world trade moves by ship. There will also be adjustments to land transportation systems.
A UNCTAD conclusion is that there can be significantly different impacts among developing economies depending on the state of their infrastructure, skills, and government policies. Those countries that are well-positioned will attract investment and grow, improving their populations’ living standards. However, peripheral economies could become marginalized unless they address these shortcomings.
The development of critical minerals will impact global trade.
Critical minerals have become a focal point of government policies. UNCTAD focused on how certain critical minerals have experienced price declines, except for cobalt. Focusing on only these three minerals is short-sighted, as numerous other critical minerals have experienced price rises similar to that of cobalt. The chart shows that the COVID economic shutdown and subsequent rebound drove these critical mineral prices up, only for them to correct once supply growth resumed.
What may be more noteworthy was UNCTAD’s observation that mining investment growth slowed to 5% in 2024. That was well below 2023’s 14% increase and the 30% growth in 2022. We suspect that 2025’s investment growth rate was also lower than in 2022-2023. They also noted that mining financing is focused on near-mine projects, with limited interest in backing greenfield development. Investors want quicker returns from their investments, but this approach may not provide the future mineral volumes that economic activity will demand. That could lead to future price hikes for critical minerals.
Government actions will also impact the pace of mineral investment and trade routes. Various governments are installing or tightening export controls over their critical mineral output. Others are stockpiling and striking bilateral mineral deals, fragmenting supply chains. Some countries are, or are considering, backing the development of refineries to upgrade their critical mineral ores to higher-value products for export. Remember, critical minerals are key to the development of clean energy and to support overall global economic growth.
Food is critical for the world, and fertilizer prices impact output and prices.
UNCTAD noted that food and agricultural products account for around one-third of commodity exports, with food products representing nearly 87% of that total. They also highlighted sharply higher fertilizer prices in 2025. However, current prices are not as high as earlier. In fact, the chart shows urea and potassium chloride prices are below where they were in January 2023. Diammonium phosphate prices are higher, but not by a significant amount.
The chart shows that fertilizer prices can be volatile. When they are high, developing countries that rely on food exports will find their profits squeezed by the higher costs. Countries that depend on food imports to sustain their populations face high prices that force government adjustments and potentially drive inflation.
Energy plays a key role in the manufacture of fertilizers, and is a significant cost factor in agriculture.
Governments are weaponizing trade via trade-disrupting policies.
A key point in UNCTAD’s trends analysis is that trade is being weaponized. In many cases, weaponization is part of a government’s industrial policies, designed to protect economies and nascent industries, e.g., subsidies, tariffs, carbon border taxes, and deforestation-related measures. In other cases, it is to preserve health standards. In its trade-distorting calculations, UNCTAD is not including tariffs or subsidies.
There are many reasons why governments might implement trade-distorting and trade-disrupting policies. The hard truth is that, given the volume of goods and services traded among countries, trade policies can influence trade flows, helping economies grow or be restricted. UNCTAD cites 18,000 discriminatory trade measures introduced since 2020, now affecting roughly two-thirds of world trade.
The UN agency expects more non-tariff measures in 2026. While it sees the actions addressing legitimate objectives, their impact falls unevenly across the world economy. Smaller exporters and lower-income economies face the highest compliance costs. This is an onerous burden to levy on these societies. That is because many of these affected economies are developing nations; therefore, the UN urges that rules be flexible and that governments provide assistance to maintain inclusive trade.
As noted earlier, 80% of world trade moves by ship, and two-thirds of that trade involves energy fuels. Therefore, trade trends will impact global energy supply and demand. Many of the trends discussed point to the dispersion of existing supply chains, meaning new trade relationships and routes. Energy will be needed to support the development of these new supply chains and trade routes. The pace at which these trends develop will impact global energy demand and affect the pace of closing the global oil supply/demand gap, starting this year.