Outlook for the 2026 Crude Oil Market (2) - Focus on Nuclear Plant Operations and Natural Gas

How should we view the year 2026? This article summarizes the perspectives of six analysts from financial institutions and think tanks, as well as several independent analysts, to identify key factors influencing the crude oil market.

Several analysts pointed to "nuclear plant operations" as an area of interest. Naohiro Niimura, Co-CEO, Market Risk Advisory, noted that while LNG exports have been rising, crude oil prices have been declining. At the same time, electricity demand for AI and data centers continues to grow, and therefore, "It is unclear whether the market will see as much oversupply of crude as expected. With Japan-China relations deteriorating, the operating status of nuclear power plants will also be important," he said. Recently, the restart of the 1,356megawatt (MW) No. 6 ABWR unit of the Kashiwazaki-Kariwa Nuclear Power Plant has been approved, and could potentially resume operations as early as the end of March. In addition, the 912MW No.3 unit of Hokkaido Electric Power's Tomari Nuclear Power Plant has also been cleared for restart. While western Japan already has a high share of nuclear power, moves toward restarting reactors are now accelerating in eastern Japan as well.

Tetsu Yoshida, Commodity Analyst at Rakuten Securities Economic Research Institute, discussed debates surrounding solar power generation. In particular, the installation of solar panels has drawn increasing domestic attention, with both support and opposition expressed. As Japan seeks to accelerate its decarbonization efforts, the country needs to reduce its reliance on fossil fuels such as coal, oil, and natural gas. This makes solar panels, which generate renewable energy, highly important. However, installing them often requires large-scale development of natural areas, raising concerns about environmental degradation and ecological impact.

He also pointed out that urgent measures are needed to counter metal theft, such as stealing copper wire from solar panels. Yoshida added, "To compensate for the disadvantages of solar installation, Japan is gradually shifting back toward nuclear power." In addition to conventional large-scale reactors, major countries are also advancing the development and operation of safer small modular reactors (SMRs). In 2026, discussions in Japan and other key countries may intensify on whether to accelerate solar panel installation or shift to alternative approaches. He concluded, "There is also a possibility that these debates will lead to a limited and temporary return to fossil fuels, which is worth watching."

Several analysts also highlighted interest in liquefied natural gas (LNG) markets. Takayuki Nogami, Chief Economist at Japan Organization for Metals and Energy Security (JOGMEC), noted that LNG supply has already begun from LNG Canada in Canada and from the Plaquemines and Corpus Christi (expansion) liquefaction facilities in the United States. Furthermore, shipments are expected to begin in 2026 from the US Golden Pass project, Australia's Pluto 2, and Qatar's LNG expansion projects.
Given this, he believes that "global LNG supply and demand will ease, increasing the likelihood of lower prices." As a result, "demand and prices for heating oil, which competes with LNG in heating and industrial uses, may be suppressed, potentially affecting the crude oil market."

Mr. Nogami also discussed US natural gas production. As LNG exports from the US grow, the domestic supply/demand balance may tighten, causing natural gas prices within the US to rise. He added that key points to monitor include: "How quickly US natural gas production can increase, and to what extent additional demand for coal, competing fuel in power generation, will curb natural gas consumption."

In addition, Tomomichi Akuta, Senior Economist at Mitsubishi UFJ Research and Consulting, is watching trends in "China's stockpiling and US shale oil production." Meanwhile, Yuki Takashima, Economist at Nomura Securities, pointed out that attention should be paid to "how effectively EU countries meet their goals of reducing dependence on Russian energy."