Market Report Week 8 - 17.02.2026

Other insights Feb. 17, 2026

IE Week takeaways and EUA price collapse

In this week's issue of the Weekly Market Report, we look back on last week's IE week. We share our impressions of the oil and bunker market, drawn from meetings with clients, suppliers, counterparties, current and former colleagues, and participation in various conferences. We also take a closer look at the latest drop in the EUA price.

However, first, a big thank you to everyone who took the time to meet us in London and to those who attended our event on Tuesday.

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IE WEEK takeaways

What do people think about the oil and bunker market in general?

Below are a few subjective, unsystematic thoughts gathered during IE week by the author of this report. Overall, market participants remain slightly bearish, though less so than many would have expected, and there is growing recognition that the long-awaited “oil glut” may not be as large as previously anticipated. The widespread calls for Brent to trade below USD 50 heard throughout 2025 have largely faded. At the same time, the geopolitical risk premium is expected to persist.

1) Iran–US talks

Iran and the ongoing talks with the US were top of everyone’s mind. However, very few believe they will end in a large-scale military operation or the closure of the Strait of Hormuz. The prevailing narrative is that any military action would be limited and targeted. Trump is unlikely to take steps that could significantly push oil prices higher as the US midterm elections approach. That said, a lingering concern remains that tensions could still spiral out of control.

2) Russia–Ukraine war

There are growing expectations that the war could end in 2026, potentially releasing more Russian crude and products back to the market. Ukrainian attacks on energy infrastructure would cease, and the US may consider easing or lifting selected sanctions on Russia.

3) Chinese oil inventories

A key theme of the week has been the significant buildup in China’s strategic oil inventories during 2025. Few have a clear view on how much has actually been purchased and, importantly, the underlying drivers. However, “oil is cheap”, “security considerations”, and “diversification away from US Treasuries” are frequently cited explanations. There appears to be a broad market consensus that China will continue to absorb a sizeable share of the global oil surplus through 2026, thereby providing price support.

4) New fuels still high on the agenda

The focus on new fuels remains global, not just in Europe. However, there appears to be a growing consensus that the postponed IMO net zero proposal is dead in its current form, although most expect some form of IMO mandated new fuels requirements to be introduced in the coming years.

5) Bunker market and the divergence between Singapore and Rotterdam

In the bunker fuel oil market, global clients highlighted the widening of the East–West spread (between Singapore and Rotterdam), notably for HSFO, and more recently for VLSFO. The lack of oil from Venezuela in Asia – and possibly also Iranian and Russian barrels – is tightening residual fuel supply in Singapore, while availability in Rotterdam remains good. Demand is also relatively stronger in Singapore than in Rotterdam. The charts below illustrate cracks versus Brent and the so–called East–West spread between Singapore and Rotterdam.

EUA price collapse or temporary correction?

EUA prices have been under heavy pressure over the last couple of weeks, in what could best be described as a toxic combination of rising political risk and a market caught speculative long. Yesterday, the benchmark Dec-26 contract fell below EUR 70/MT, down 25% from the January peak.

Political rhetoric has been the primary driver of the sell-off. Last week, German Chancellor Merz signalled openness to revising or postponing tightening measures in the EU ETS, echoing earlier comments from President Macron, who argued that prices should be closer to EUR 30–40/MT to better balance climate ambition with industrial competitiveness.

Although both Merz and Commission President von der Leyen later defended the system, the cat was now out of the bag regarding political risk in EUA pricing. A risk premium had entered the market well before expected. The European Commission will formally discuss the EU ETS in Q3, but the debate is already public.

This comes, of course, on the back of a European — notably German — energy-intensive industry struggling to keep up with Asian and North American competitors facing lower gas prices and low or no carbon costs. Add US tariffs, a weaker US dollar, and a true hurricane has hit European manufacturing.

At the same time, speculative positioning has clearly been skewed to the long side. This positioning overhang, combined with rising political uncertainty, is a toxic combination that has left the market with a falling EUA knife that few participants are willing to catch.

From a technical perspective, the market appears oversold, with the RSI (technical indicator) below 30. The break below EUR 70/MT was also technically significant and opened downside risk to EUR 63/MT—the April low seen in the aftermath of the Trump administration's trade escalation.

However, for hedgers, the sell-off also offers a buying opportunity. There is a long lag between political rhetoric in the press and actual supply-and-demand changes, supporting taking advantage of lower prices for compliance hedging in 2026 and possibly 2027.
That said, the market remains highly nervous, and the long speculative positioning may have exaggerated the move lower. Yes—the EUA price may have collapsed, but it may prove temporary.