Daily Update — October 28, 2025
Germany's Hydrogen Industry; Sanctions Impact Crude Prices; and Funding Growth in US Southwest
Today is Tuesday, October 28, 2025, and here’s your curated selection of Essential Intelligence on global markets from S&P Global. Subscribe to be notified of each new Daily Update.
Energy Transition & Sustainability
Germany's Hydrogen Infrastructure Regulation Makes Visible Ongoing Risk
Germany's hydrogen industry is at a critical juncture. Infrastructure regulation is now in place, but whether this boosts the hydrogen economy remains in question. Success will depend on green hydrogen becoming attractive for large-scale industrial and chemical production, as well as for transport. A credit-supportive balance between operator liquidity and return protection against the uncertainties of a nascent hydrogen market will also be key.
As Germany navigates this ambitious shift, evolving regulatory elements, including returns on equity and risk-sharing of investment deficits, will be critical to determine whether hydrogen grid operators can maintain credit profiles comparable to existing regulated grids. Operators in Germany are granted a pretax nominal return on equity of 6.69% for new hydrogen assets through 2027, which might change from 2028. This is lower than the 6.92% ROE for new gas and electricity assets (calculated based on June 2024 interest rates and updated yearly, based on borrowing costs), despite considerably higher investment risks for hydrogen network developers.
Global Trade
US, EU sanctions on Russian energy giants target Asian crude flows
Global crude prices surged Oct. 23 after the US and EU increased sanctions on some of Russia's largest energy companies, targeting major oil flows to India and China. The US imposed sanctions on Rosneft and Lukoil late on Oct. 22, and the EU issued full transaction bans on Rosneft and Gazprom Neft on Oct. 23, as well as sanctions on Lukoil subsidiary Litasco and the trading arm of China's largest energy company, PetroChina.
The sanctions, which follow similar measures from the UK on Oct. 15, mark a significant escalation in Western efforts to degrade Russia's ability to fund its war in Ukraine, with US Treasury Secretary Scott Bessent stating the moves are a response to Putin's "refusal to end this senseless war." S&P Global Commodity Insights analysts expect a gradual but meaningful shift in crude trade flows as Asian buyers seek alternative supplies. Middle East crude differentials have surged on the news.
Private Markets
Venture capital-backed rounds of funding surge in US Southwest
Private equity- and venture capital-backed funding rounds in the US remain concentrated in the West and mid-Atlantic regions, though other areas are gaining ground, according to S&P Global Market Intelligence data. The Southwest region recorded the most dramatic growth, with funding values surging more than 159% year over year to $27.26 billion in 2024. It was the largest regional increase outside the dominant West and mid-Atlantic markets.
In 2025, transaction value in the Southwest is on track for a down year, with venture funding at $12.50 billion through Sept. 30, or only about 46% of the 2024 value. Some regions are showing a rising trend, with year-to-date funding rounds in the West and Midwest already surpassing 2024 totals. Among the Southwest states, Texas is seeing exceptional growth in venture capital activity: High-profile companies including Space Exploration Technologies and X announced in 2024 that their headquarters were moving to Texas from California.
In case you missed it
- US fertilizer market sources have expressed uncertainty about when $3 billion in US Agriculture Department assistance would become available and the impact the funds would have.
- The Dutch government’s takeover of Nexperia exposes new risks in Europe’s automotive chip supply chain and deepens global semiconductor tensions.
- Singapore's commercial inventories of heavy distillates dropped 8.1% week over week to a four-week low of 23.03 million barrels in the week ended Oct. 22, due to lesser imports into the world's largest bunkering hub.
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