Part I: The Great Energy Pivot: How the Rules of Global Oil and Gas Are Being Rewritten – Fat Tail Daily

In recent months, I’ve been making the simplified case that energy is made up of the ‘haves’ and ‘have-nots.’

On one side of the ledger sit the buyers: Europe and Asia.

On the other side sit the sellers: the US, Russia, and Saudi Arabia.

These three countries make up almost half of global oil and gas production.

Of course, this is a very simplified breakdown, but it gets to the general gist of how oil and gas markets operate.

And despite decades of conflict, embargoes, and blockades, very little has changed in this key dynamic.

The ‘have-nots’ have always found willing sellers of oil and gas to support their dependence on energy.

But as I’ve mentioned previously, a reordering of the global energy trade is underway. And that was evident well before the war in Iran took off.

As you may know, last year, the EU pledged to terminate its decades-long energy trade with Russia.

Cheap Russian gas has been a major tool in powering post-World War II Europe. Fuelling European manufacturing and giving birth to some of the world’s most iconic brands.

But that’s set to end as Europe continues to ‘cut off’ Russia’s war revenue in the conflict against Ukraine by ending Russian gas imports.

However, by doing so, Europe is swapping cheap Russian pipeline gas for far more expensive US LNG. Economically, it’s a doomed strategy.

It’s pivoting European countries towards an era of much higher energy costs, just as global supply is becoming increasingly constrained.

Meanwhile, Russia has easily found new buyers, mostly via China.

And by doing so it is establishing NEW long-term supply networks and infrastructure projects.

Just like the Power of Siberia-2 pipeline, that’s set to permanently re-align where Russian gas flows. No longer into Europe, but into Asia.

Bottom line: this is becoming a permanent shift in global energy trade, just as global supply becomes more uncertain.

So, what’s the consequence?

As I’ve outlined in the past, I believe we’re in the midst of a major switch in the global energy trade.

So far, this has unfolded without a major glitch.

But it means energy-reliant nations, especially those sitting within the European bloc, are leaning into extreme dependence.

And this gives the supplier far more power.

According to the Institute for Energy Economics, by 2030, the United States could supply up to 80% of the European Union’s liquefied natural gas (LNG) imports.

This represents a mammoth jump from the roughly 57% share of LNG imports the US accounted for in 2025.

Have no doubt, this represents a new, much more deep era of energy dependency for the ‘have-nots.’

And as more power lands into the hands of the seller and AWAY from the buyer… The potential for friction grows.

How that looks in the months and years ahead, no one can predict.

But the key point is this: Energy is the most critical element in our modern economy.

Energy markets have operated harmoniously for decades, albeit with some minor skirmishes.

But for the most part, it has operated with a diverse range of buyers and sellers across the market.

But that delicate dance is unwinding right before our eyes and it could have profound impacts in how economies operate.

Stay tuned, as we dive deeper into this theme next week.