This is Tom Rollins' Reese, and you're listening to "Switched On," the podcast brought to you by Bloomberg NEF. Commodity markets have had a turbulent year, with wars, sanctions, and political shifts rewiring global trade flows. As 2026 gets underway, Bloomberg NEF's commodities' energy and environmental markets teams are looking ahead to a series of pressure points, from a looming glutton LNG and slowing US oil growth to challenge this rapid expansion in renewable fuels and petrochemicals reshaping global supply chains. Layered on top of that are rising carbon prices, shifting weather patterns, and a surge in power demand from data centers, all of which are adding new complexity and volatility to already tight markets. With so many forces pulling in different directions, which trends are likely to define commodity markets in the year ahead. To discuss this, and more, today I'm joined by David Doherty, the NEF's Head of Natural Resources Research, and Enrique Gonzalez, Head of US Gas, to review findings from the know, commodities in 2026, 10 numbers to watch from power to oil. BNEF clients can find this note, along with other commodities research, by heading to BNEF Go on the Bloomberg Terminal, or BNEF.com. If you'd like to learn more about how BNEF approaches strategy research on the energy transition, including developments in commodity markets, trends across different sectors, and the cross-cutting technology shaping the future, you can find more information on BNEF.com. And if you'd like to speak with a member of our team about becoming a client, email us at
[email protected]. With that, let's dive into the key numbers and themes to watch this year. David, welcome to the podcast. Thanks, Tom, for having me. And Enrique, welcome to the podcast. No, thanks for having me as well, Tom. So today's conversation is, in a way, it's like a little bit of a pick and mix, because we've produced this report that commodities in 2026, that just picks out work from across different teams that focus on commodities markets. For some numbers that we think are going to maybe define 2026. So I suppose before we kind of get into the weeds, I mean, how is the process of trying to figure out which of the key numbers? Was it difficult choosing your selection, curating it for our readers? It's a really interesting question. I think, actually, the more that I look at it, I realize the 2026 is quite a bunch of tipping points or pivot points. So whether it's like slowdown in American oil production, a tipping point in the copper balance, LNG prices needing to incentivize export, for example, there's a lot of really individual points that I was like, oh, that's actually kind of interesting, let's highlight that one. And the more we went through, I probably, like, maybe seven of the 10, we're like crucial years. So I thought, okay, this is going to be a gun. It was kind of interesting. I mean, actually, I was just, you know, looking through the notes before and I was thinking something similar is that a lot of the kind of things we've spoken about more generally at B&EF about crucial transitions, they seem to be, you know, at the point where the rubbers hitting the road, but it does seem like a bit of a theme. And so maybe we can identify them as we talk about them. Let's start off with when we're talking about commodities, the kind of, I always say that sort of if commodities was like high school, then the jocks that everyone is looking at aspirationally, this was a teen movie, it's oil, you know, they're cool and good looking, maybe disliked by everyone else, but sort of with a certain amount of jealousy. I don't know if that's how you would characterize it, but we'll start with the cool kids. What's going on in oil? And in particular, you know, the global picture, every year we talk about whether there's a deficit or a surplus, what is 2026 looking like? Yeah, first of all, thanks as a math leading school, I'm going to take this and run with it. 2026 in the oil market, it's almost like for four or five months, the oil market has been waiting for this massive surplus of oil to happen. And then we think it's possibly happening now, but there's no real clear numbers coming out to show us that it's well oversupplied and you can ask a bunch of different agencies from BNF to the international energy agency, you could have between two and three and four million barrels per day of an oversupply, but the oil price still is pretty comfortable. The Brent oil price around $60 per barrel, so it's not really turning into a fundamental shift in the oil price just yet. And everybody's looking at it saying, when will this happen? What's about to happen? And then your big producers are looking at this saying, like, this is going to dictate what I do in my investment strategy, because it's going down. I'm not going to throw up on cash into it right now, right? So why is it that there seems to be this consensus that there's this big wave of surplus on the way? You know, we haven't yet seen. Yeah, we've had a big unwind from OPEC organization, petroleum exporting countries, right? That organize that a third of the world's oil production in a way to offer any spikes in prices and manage an inventory to avoid any crisis, right? So any crunch and supply, they take oil off the market when there's a weak demand like during COVID, right? The OPEC over the past six months have basically stepped back from that role, having cut a bunch of production over the past two to three years. They took a bunch of oil out of the market. They lost a lot of market share to the likes of Guyana, Brazil, and the United States. And in this saying, we've lost enough market shares. We're bringing it back. So they turned on the taps and from September onwards, we saw a ton of oil come back into the market. That's the main driver in this big surplus, but there's also new new places that never produced oil before Guyana is now almost a million barrels per day producer. From almost zero in 2015, Brazil is boomed. You've got a lot of new markets that never really produced before who are gone to market and have taken over share from the likes of Saudi Arabia, the UAE, for example. So that's interesting. I mean, I remember that being like a similar situation in 2020, and obviously the pandemic played a role there. But from what I understood at the time, OPEC did also increase supply, and now I know that they had done that at some point in the 2010s as well. So this seems like a cycle, and the narratives at the time I remember in 2020 was some of this is about pushing back on particularly US producers, you know, putting them back in their places. Now we have, it's not just the USBF places like Guyana. If this is a cycle, is the cycle becoming tougher and tougher for OPEC? Yeah. I think is the answer. So traditionally, they have played this balancing player role, right? To keep things stable, but they have had moments in the past where they've done exactly what you just said and thrown a lot of oil out into the market and tried to squeeze players out like US shale producers who from 2015 on led a boost in production that paid away at their profits, right? OPEC's profits. So there's been a real interesting change in how they posture themselves. They went from a kind of a boring period in like the 90s and 90s to a more aggressive stance maybe in the past couple of years as they faced more threat from new suppliers which didn't exist beforehand. So I mean, going back to this thing you said at the style of the podcast about around tipping points, is the tipping point that, you know, we're expecting all surplus to come onto the market in 2026 and so at some point, that tipping point will hit or is the tipping point that this periodic rebalancing or that OPEC does is becoming less and less effective for them? Or is there something else when it ends or will it's neither of the above, I think it's about the above, just wide at the mark, you know, I mean, it's, listen, the oil market isn't kind of flexible. It always finds a way to do something with the excess or to find a shortage, right? And price drives all of these things. For context, rent is now about $61 per barrel. We think over 2026 is going to average about $55 per barrel. So it's not a huge gap, but we do think that it's going to trend down closer towards 50 towards the end of the year as this surplus starts to build up, but you can do a lot of things. You can store it where you have storage on ground. China's been doing a great job of just filling up its taverns and its storage capacity and buying it at a cheap price. You can even storage on the ship. So you see rates of hiring out vessels in order just to keep from stationary offshore with a bunch of crude oil in it, increasing. So there's lots of different ways you can, let's say, buy cheap oil when it's hanging around and keep it until you need it. And we've seen that in the past few weeks. Okay, it's interesting. So it might be that we see this less manifesting in prices and more in the sort of the behavior of players in the market, which kind of leads me to my next question, which is around specifically how all of this impacts US crude production. Yeah. So we forecast a much, much slower story in terms of incremental production from the US out to 2030, but there is still growth there. And that is probably where we're different to some other forecasters. You all have maybe heard of peak shale or is the shale revolution coming to an end, etc. We don't believe that. So this is a non tipping point for us, non tipping point, if a plateau could be a tipping point, this would be a tipping point, I guess, but it's, you know, you'd dress it whatever you want. A lot of other forecasters are saying we're going to see decline in shale. We actually think that the efficiencies that shale producers have built out over the past few years are now coming to fruition. They can spend a lot less and get a lot more. And that's becoming apparent in their production profiles. So you might have large oil companies in the US indicating, let's say, a five to seven percent increase in CapEx over the next few years and aiming for a 20% increase in output. You got this detachment. Whereas for a few years, it was like, let's borrow just to drill. So the capital discipline has tightened, they're going to be a lot smarter with their money. And technologies really allow them to improve how they drill wells, direction of wells, the efficiency of all of this, but you are starting to see costs balance out of that incremental investment. They're playing as sort of a smarter game than they had them in the past. That's so interesting. And it comes back to this thing that we're saying is, you know, maybe some of the power of OPEC to dictate who's going to be able to be profitable has weakened. I mean, I, because I remember in 2020 was devastating for a lot of shale producers. And then that, that was the start of the era of this capital discipline. And now we're seeing a more resilient industry with maybe more global market power as a result. All of those small, momma pop shops merged. They all became part of larger corporations, much more financially stable. They got a market. They don't have to go to the banks for loans anymore, nothing of the same extent they used to anyway. So it's just, they're just bigger players. They're more stable. And then when we're talking about oil, the other dimension in all of this, you know, if we're thinking downstream is what could all of this mean for pet comes markets? Any significant things happening in 2026 in there? Yeah. There is a lot actually. So this is a perfect example of a boom, bust cycle industry, high prices, a lot of new capacity. It's the low prices, it's the closures and all capacity. And we're going through this really tight bench, where you're seeing a lot, a lot of capacity coming on, particularly in India and in China, it's Southeast Asia and a lot of capacity in Europe and the US really struggling with weak margins as a result of that, particularly in Europe. You're seeing a lot of closures in Europe when it comes to these facilities. It's like a pattern that we've seen in all of the renewable energy industries as well playing out, you know, capacity moving to Asia. So what does that mean for China, specifically, you know, firstly, why is so much capacity building up in China around this and is that going to be a profitable industry for those producers as well? Are they working on really thin margins? Yeah, profitable and China is a really great question because maybe, maybe not, you never really have the transparency and the data. What China loves to do is to solve for its biggest short. So if it's relying on importing products like gasoline or Jeff fuel or diesel, we've seen them in the past, build refining capacity so that they can supply themselves, right? So they're doing the exact same thing in the petrochemical sector. They currently import polyethylene from different parts around the world. And what they're trying to do is to build facilities so that they can produce that polyethylene domestically. So we have this big build out over the next couple of years of polyethylene production capacity and polyethylene stuff that goes into plastics, right? Right. Into manufacturing cars, for example, really televisions, and they are basically trying to solve that short. They're very close to doing so as well. So we would think at that stage, the build out would probably slow down. And what they've started to do with the other products which they now have excess capacity of is sell that into the international market. So great example is gasoline, right? There's a ton of VVs in China, they have a ton of refining capacity, and they have more gasoline than they consume, and they sell it out into the market. Right. So it's almost like Chinese self-sufficiency or the drive to self-sufficiency in China means over capacity for the rest of the world. Yeah. I mean, the elephant in the room when it comes to it doesn't have enough oil, right? There's not enough crude oil, and you can't just build to solve that short. You have to import because you can either take it out of the ground or you cannot, right? So that is the big problem, I suppose, in terms of the weak point of that strategy. But this is why they store so much oil in China. This is why they are the biggest buyers in the world. This is why they have all of this capacity, much bigger than the US, to stock oil. And they've had a great time over the past few years and being able to source cheaper barrels. I mean, whilst we're on the topic of securing supply, at the time of recording, the president of Venezuela has been taken to New York to face charges by the US. So there's a lot of uncertainty what's happening in Venezuela. And oil has been talked about a lot there. So what does all of this mean for US oil and US energy security in just generally, the oil market generally? Yeah. And there's a ton of question marks. What does it even mean for the oil market who is in charge, who's going to get oil out, who's going to keep oil in? Venezuela produces a very heavy oil, much akin to Canadian oil, which US refiners are really perfectly suited to process. They built themselves actually off of the concept of having the import available from a Venezuelan barrel, for example. So they can take a high sulfur, a heavy barrel, and turn it into high-class products like gasoline, Gulf Coast refiners are perfectly paced to do it. Venezuela's had years of neglect in the oil industry in Venezuela and production has gone from about two and a half million barrels per day around 2010 to 2015, down to about just under a million barrels per day that we know of now. And I say that we know of because the data is pretty difficult to track. And it's not overnight that you can go and send an oil major in and turn that back on and have it back into the market, right? It's going to take a lot of time. If it does though, they will compete with the likes of Canadian barrels, or even Colombian barrels or Mexican barrels, which will then find their way somewhere else into the world, and the market will have to solve for that. But it is an interesting time because there's a lot of excitement around getting this oil out onto the market, but it won't be that fast. It's not going to happen overnight. It doesn't turn this two or three million barrels surplus I was talking about at the start into a two and a half million barrels per day larger surplus. It takes a lot of time for that to come out. The other question I have, I mean, if you're making the comparison to Canadian cruders and in my limited understanding, you might correct me. But I know at a certain point in time, the narrative was that Canadian cruders, you know, very much on the margin, you know, not the most competitive from a cost point of view. Is the same truth of Venezuela and oil? Well, Canadian is actually pretty competitive from a cost point of view. In terms of like a green field in Canada, that's quite expensive. But in terms of brown field, and what that means, green is like brand new, brown means continuing to operate. What is already there? The costs are pretty low for Canadian actually. Got it. So it can trickle through. It can compete pretty well. So it's in a pretty good place. The big difficulty is getting it out right. You can get it to the US pretty easily. You can't really get it anywhere else, right? Right. Right. So they're kind of stuck there with the US for now, unless they build out infrastructure, which we've, you know, heard about. So let's see what happens there. I guess the big question mark is if you're an oil company, like, why would you risk going into Venezuela and throwing tons of cash into a market that's pretty risky when you could go to neighboring Guyana, or you could invest somewhere else. Maybe Brazil, maybe Colombia, maybe any of the other markets that are a bit more stable. When Venezuela was the king of oil in South America 15, 20 years ago, nobody else really competed with it. Brazil has since increased by over 2 million barrels per day of production. Guyana by over 1 million barrels per day of production. You're seeing a bit of a revolution in Argentina and the Shale plays down there. So you had all these markets that weren't really big players back in the day when Venezuela was the big player. I know they're bigger. Brazil will be bigger than Venezuela was at its peak. So the market's completely changed there. So we might be treating it as, oh, it worked like this before, so it'll probably work like this again. And I don't think that's the case. It's interesting. I mean, and it comes back to the theme of tipping points and things in 2026 being different to how they were. So we have an oil rich nation with political uncertainty and I think our off the shelf narrative of that is, you know, oh, well, of course, someone's going to be wanting to get their hands on the oil. But right now, it seems like I wouldn't want to say it's hardly worth it. But there's no urgency for that because there's a surplus elsewhere. And as you say, there are better options. Yeah. I mean, oil is a depleting business. You have to just spend money to stay flat, right? That is just the function of the market. So this is a longer term play if anything. But the objective is to go to Venezuela in order to secure future battles. This is the objective. It's not to get them onto the market in the next two to three years. This is further down the line than that. Let's switch gears and bring in and reconnect into the conversation because we've been talking about oil a lot and we've been talking about, you know, in particular how some of this affects the US. Now, you focus on US gas, which is potentially of pivotal importance to global gas. So what do you think has been the sort of the key feature in our view of what's going to change in 2026? It's maybe starting with the US and then we'll move on to the global picture. Yeah. As you mentioned, yeah, the US, I think now more than ever, plays a huge role, especially in global LNG markets, liquefied natural gas markets. A few years ago, it surpassed Qatar as the biggest exporter of LNG. And yet in the US, we continue to see the country build out LNG exporting capacity. So 2025 was kind of the kickoff of the second wave of facilities. We also saw a lot of new facilities reach our final investment decision. So we have a lot more capacity coming online. It should double between 2025 and 2030. So really flooding the market in a way with a lot more liquefied natural gas. So so 2026 is kind of the start of a new phase on something that's already huge, which is US LNG exports, but I suppose it's one thing the US being the biggest player because someone has to be the biggest player, right? So the fact that the US is the biggest player doesn't necessarily have global significance. But if the biggest player is then ramping up to another level, then that does. And are we saying that 2026 is the year we start to see the beginnings of a new phase of the global LNG market because of what's happening in the US? Yeah. It's more like the continuation of the US still stepping on the gas, right? To build new facilities. A lot of the houses. And then trading to use that. And then Qatar as well joining in in 2026 with the North field expansion. So also adding a lot more capacity. And the difference was that, yeah, before it was kind of the US leading the way alone, there was also a few other countries, Australia, Mexico, and then in Africa. There's some more capacity, but now we have the second biggest player joining the party in a way. So things are picking up. So how is this going to affect LNG prices in 26? Yeah, no. First thinking about the demand side, we are expecting demand for liquefied natural gas to increase globally. First Asia is the place we see that will drive that growth as like many countries there continue to industrialize, but also seek to decarbonize. We have markets like India where they're still investing heavily in their infrastructure. And we expect industrial demand to increase. There is a decent amount of build out of new gas-fired power plants as well. Maybe when we're thinking of Asia, China is where we haven't seen as much growth as some we're expecting. So there's some risk there. And then you also have euro. That's a pretty large consumer of LNG where we expect the gas will stick for longer than we originally thought. But the fact is supply is increasing so rapidly that we're expecting it to outpace demand by 2027. So sort of a couple of years of abundant cheap LNG. Yeah, exactly like out to 2030, we're expecting the market to remain pretty loose. And then of course, you get that excess supply prices are expected to drop. But at the end of the day, for example, to unlock a lot of new demand, you would need to be able to replace coal, right? And for that to happen, you would need extremely low LNG prices to the point where it would no longer make sense to export that LNG because you just don't have that margin. Let me just make sure I understand what you're saying is to replace coal, you need to build the gas capacity. So you need a lower gas price than just to displace coal with an existing gas plan, right? But then for the gas price to be that low, it's not going to be enough to incentivize expansion of capacity. So that's sort of the limit we run into at the moment. Yeah. And coal is so cheap in that, like some of the, these countries that, yeah, gas is these countries. Yeah. For example, like China and India, to the point where, yeah, using LNG for power to replace coal would make sense just on an economics-based person. So this is sort of a story that really impacts, say, you're in terms of, you know, the consumers and then say Japan and maybe Korea as the sort of the countries that would be making use of this LNG. Yeah. And also, like the other area where we see, I think also across Asia, where the surplus could be absorbed this on the industry side of things, so replacing some fuel oil. But again, like the point where I'm trying to drive us to is, yeah, that this oversupply might, might be big enough that even with lower prices, there might not be enough demand out there. So we might actually get to a situation where you have to close some of your LNG export facilities right and stop liquefying that gas until the prices make sense again, or the demand shows up in the market. The other dimension, or the other part of this equation that I find interesting is how all of this affects gas in the US. I've been in the US since 2021, I've been doing analysis on the US since 2020, and as someone look at the power sector, the thing I had to get used to is how cheap gases in the US compared to the rest of the world, it sort of changes everything. And the narrative has sort of always been it's like the gases boxed into the country because there's not enough capacity to export it. That's beginning to change, right, from what you're describing. So are we seeing upward pressure on US natural gas prices? Are we expecting to see a big change there in 2026? Yeah, no, I think even already now we've felt the pressure that LNG has put on the market. Since the start of the second half of 2025, as we had a black emins LNGs, the liquefaction facilities start to ramp up, we already started seeing prices fuel that pressure and start to rise, it's one of the largest facilities, and especially going into the winter. We started with a pretty cold December, we saw prices spike, I think we got up to $5. And one of the big differences, if we go back even three, four years back, or something to think about more than a difference is you still have the same amount of storage capacity. So with this LNG facilities, you have potentially a lot more demand while you're buffer right for the winter when you have more demand than you have supply staying the same. So it does open the door for more volatility as well, besides higher prices. It's interesting, and we come back to this theme of the tipping points. And tipping points that were always on the cards, but maybe 2026 is when those cards come in, because we're seeing falling natural gas prices globally and rising natural gas prices in the US. The logical end game of the US expanding its LNG export capacity is a convergence between global and US natural gas prices. I'm not saying we're there yet, because I think if you go to Europe and say $5.00 Pomembi to you, you've converted that into megawatt, euros per megawatt hour, that's still pretty cheap if you're in Europe. But maybe 2026, we're starting to see the start of a meaningful price convergence between the global and the US pictures. Yeah, no, and we're already seeing not only the prices in Europe in the forward curve dropping in the anticipation right of all this new supply that's coming into the market, but we've also seen the Japan, Korea market, the forward curve for those prices fall as well in anticipation of all this new supply. So it's something that the market's already expecting to happen. And of course, yeah, this spread between Henry Hall and this global prices tightening up. It's fascinating. Yes, almost like 2026 could be the beginning of a new phase for the global gas market and the US gas market. Maybe we won't be talking about them separately so much anymore. Yeah, no, I think 2026 and yeah, till the end of the decade is definitely a big shift. I think the gas market has evolved from, yeah, market that typically has been very regional or not as interconnected globally to, yeah, something that's becoming completely different than what we were used to before. Let's move on to another commodity that is really interesting to us and that is renewable fuels. And I know that there was a part of the report we published was looking at what's going on in China with renewable fuels. So David, tell us more. Yeah, this is an interesting market. So you go from talking about oil, which is very cool to renewable fuels, which I feel like is the real athlete of the classroom, which I also enjoy. It's a really interesting market because China's more than half of every story in every renewable except for renewable fuels. They don't have mandates for gasoline like they do here in the US or they do in Brazil or in Europe. But I think this is the year I'll call it that they that they tip into being a leader specifically in this sustainable aviation fuels or the staff market. And the reason for this is if China says it's going to do something, it doesn't, and it doesn't do it in five years, it doesn't when it says it's going to do it. In March, they have their five year plan where the latest five year plan will be announced. And there's all emphasized rumors and whispers that within that, there'll be a mandate for sustainable aviation fuel that is currently limited to places like Europe where you see a blend mandate for 2030, depending on the country between five and 10% for example, or in Singapore, interesting, but not the huge markets, China, huge market. And if they say they're going to do it, they will do it. Another interesting part behind it is China has for the longest time been sending used cooking oil, which is one of the lowest carbon feed stocks to create sustainable aviation fuel around the world. So they've been sending it to Europe and they've been sending it to the US. And there's been a lot of controversy around how used that cooking oil actually was, was it used once did they use it just to say it was used lots of classification. So there's been a lot of restrictions on those imports. I love the idea of someone doing some token cooking. But the big difference is now they have a lot of use cooking oil in China, right? So they don't need to export it, they can produce it. There are sustainable aviation fuel domestically from that you code used cooking oil. And what we've seen is the build out and capacity of over a billion gallons scheduled for 2026 in China. That's a huge number. It's over half of the global total expected to come online in 2026. And again, emphasizing China just wasn't really a big player up until recently. So you're seeing the early signs of a infrastructure build out, a policy support potentially coming in really quickly, like in the next 12 weeks. And then a concentrated aviation market that's pretty much ran by the government. So that could change the whole landscape. It would change flows, it would change food stock flows, and it would change about, I suppose, the way we perceive sustainable aviation fuel, right? I suppose that, you know, because whenever China moves into an area, you know, the rest of the world has to take note, it's either a great opportunity or a great threat, or maybe a little bit of both. So the sustainable aviation fuel, it seems their moves to supply this emerging domestic demand, which is going to be created by policy provisions. For the rest of the world, that might mean not, they're not being as much of this used cooking oil as a feedstock anymore, which would presumably push up global prices. You know, how do you see it playing out? Does China become an amazing market for sustainable aviation fuel? Or does it become like it has in so many other areas that the dominant supplier in a global industry? Yeah, it could. The sustainable aviation fuel market is incredibly bizarre. Think about it like this. The U.S. is vegan, right? Europe is adversarial, and China is carnivore. You can make a cake that's gluten-free, you can make a cake that has, let's say, milk in it, or, you know, bacon on top, whatever, and then you can have a cake in China that's just laced with steaks on top, whatever, right? Right. That's a weird cake. But the ingredients that go into it define the product that come out of it, and not every market recognizes the product based on the stuff that goes into it, right? The vegans are not going to eat the cake that's made with eggs. Right. So today's aviation fuel, some markets will take ethanol, for example, as an input, or soybean oil, for example, that you'd get here in the U.S., that might not be recognized as a saff in Europe. Right. But the ingredients really define the product that comes out. In Europe, you're not allowed to use certain types of palm oil, for example, which you might source as a feedstock in Asia, which is normally not a problem if you're driving a car, right? Because you're probably not going to drive the car to China. If you're flying an airplane, though, you might take off in London and London Beijing, or vice versa, and one of those jurisdictions might recognize that you're using sustainable aviation fuel, whereas the other one might not. Right. Right. So yeah, they might become the leader in specific types, but they might not become the leader in all of the types. Right. If that makes sense. Because it's fundamentally a market that is created out of policy, guardrails out of policy. Yeah. And the policy is different in all of the large markets, which is the patchwork of confusion, I guess. Yeah. It can be very fragmented. It really depends on what the consuming market will allow, be registered as consumption, because all these airlines are in theory, paying premium for this product. So if they're going to pay a premium, they want it to count towards the regulation in the market. They're flying it in. It's maybe not as simple as, you know, China is going to just move on and dominate, but it certainly is the case that if these policies are put in place, it will shake things up in the industry globally. They will absolutely shake things up. The really interesting part is if there's not enough, let's say, use cooking oil to produce sustainable aviation fuels a sort of traditional way, if you want to call it through, um, hedge processing, like through refinery. If they then start to develop these new technologies to create, let's say, e fuels, then those can scale. And they're really pretty, I would say universal. Right. If you make it from clean power, hydrogen, carbon, makes the sustainable aviation feel from it. Europe will recognize that. The US recognizes that it's not as dependent on the feedstock. And that is where I think the tipping point could come. If China doesn't have enough to supply itself with this used cooking oil technology, then the new technologies could really start to turn into the solar panels, the next solar panels of the world. They could export that. That would be a technology that was scale. So I suppose on that front, we need to just watch this space. Yeah. But March 2026 might be the month to watch your foes going to watch any month. Yeah. Okay. That's really interesting. Put that in your diaries. If you're at all interested in biofuels, could be a defining month. So we've talked about a few tipping points today. You identified a tipping point around copper. So what is that? What's going on there? Does it fit into any of the types of tipping point that we're seeing for the other commodities? Yeah. It's a really interesting one because it's a market that's gone from fairly balanced, slightly in surplus. We think that 2026 will see it go into a deficit and a sustained deficit. And that is the kind of different point to the other commodities we spoke about today. But it's one that's really driven by transition. Yeah. It makes it, I suppose, just different to the other ones we talked about, which are a bit more fundamentally driven, potentially use. Yeah. I mean, if I was to try and like force a narrative onto this, a lot of the traditional commodities, you know, fossil fuels, surplus, and then, you know, the transition commodity was somewhere in short supply. I know that's too simple, but you know, there's maybe something symbolic about that. Very different size markets as well. I think the big thing to take from this is the small pond, the big fish. It is key for everything, right? We've seen this big build out of data centers that's impacting power across the world. It's impacting gas across the world. It's impacting coal even across the world, right? Obviously, a key ingredient in building a data center is the wires, right? Yeah. So there's a huge amount of copper that goes into these, which is driving a shortfall that's already been driven by delayed mines coming on, sanctions and tariffs around the world. Things like EVs taking off, which again, use a lot of copper, great infrastructure. It goes on and it goes on, all those offshore wind farms, they got to get power back to land somehow. So there's just tons and tons and tons, quite literally, I've copper going into this transition and it's a delicately balanced market, I would say, and it takes a long time for new supply to come online. You could be looking for a green field project in a really mining friendly country, maybe 10 to 12 years. So we're already really behind if we think about any of those forecasts or projections that you see around wind build out or EV take up or data center uptake or miles behind and even if you wanted to expand a brown field or an existing mine, could be five to seven years by the time you get the right policies in place and the permits that you need in order to get that out of the ground. The problem there is then that goes up in price, right? Because there's a shortage and that could slow down other technologies developing or you'd need to find a replacement, right? Interesting. We use the high school movie analogy, copper is like that kid that nobody ever noticed and then all of a sudden they're in high demand and everyone wants a piece of them, but they need to make sure they play their cards right because the world might decide, oh, you know, copper is too difficult to work with, we'll move on, we'll find something else. But if copper rides this wave, it could be suddenly the coolest kid in school. Yeah, I think that's a fairly fair assessment. If not, it mean girls are inside and we'll take it. It's just an interesting market. We've also seen a bunch of external factors impacting the price over the past few months with sanctions and just how the market's price, it's really old, old school. It's assessed via warehouses and specific locations. So we see sanctions last year or tariffs from the Trump administration leading to a ton of copper being imported into the US and then the rest of the world where a lot of those pricing warehouses are more than in the US have a shortage of the price spikes, even though actually supply demand is probably fine, it's just about balance, right? Right. So it's a quirky market and we've seen lots of disruptions, right? So, but it is the one to watch is what everybody's paying attention to. You've seen a lot of news headlines over the past few months. So yeah, let's see, 2026 will be interesting because it'll be the first shortage and it's a key ingredient and a lot of these exciting things that we talk about, right? Well, David, Enrique, this has been fascinating and I mean, you weren't wrong, there's a lot of tipping points happening in these various different commodities in 2026. So there's going to be a lot to watch. So thank you for joining and framing this all today, David, thank you for being here. Thank you. And Enrique, thank you for being here as well. Yes, thank you. Today's episode of "Switched On" was produced by Cam Gray with production assistance from Kamala Shelling. Bloomberg NEF is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute nor should it be construed as investment advice, investment recommendations, or a recommendation as to an investment or other strategy. Bloomberg NEF should not be considered as information sufficient upon which to base an investment decision. Neither Bloomberg Finance LP nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the information contained in this recording and any liability as a result of this recording is expressly declined.
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