Projected Oil & Gas Demand Growth Until 2050: Key Insights for Investors and Businesses in Oman
LONDON – The International Energy Agency (IEA) announced on Wednesday that global oil and gas demand may continue to grow until 2050, marking a shift from its earlier predictions of a rapid transition to cleaner energy sources and indicating that climate goals are likely to be unmet.
The IEA, recognized as the energy security watchdog for Western nations, has faced increasing pressure from the United States to adopt clean energy initiatives. This shift began during President Donald Trump’s administration, which encouraged American companies to boost oil and gas production.
Under President Joe Biden’s leadership, the IEA had previously forecasted that global oil demand would peak within this decade and asserted that no further investments in oil and gas would be necessary to achieve climate objectives. Chris Wright, Trump’s Energy Secretary, criticized the IEA’s peak demand projections as "nonsensical." The IEA is funded by member countries, with the U.S. as its largest contributor, and its analyses are fundamental to global energy policies.
In the annual World Energy Outlook published on Wednesday, the IEA projected that under current policies, oil demand could reach 113 million barrels per day by mid-century, a rise of approximately 13% compared to consumption levels in 2024. Additionally, it forecasted a 15% increase in global energy demand by 2035, equating to an additional 90 exajoules.
The current policies scenario reflects existing governmental policies rather than aspirational climate targets. The IEA had last operated under this scenario in 2019 and pivoted in 2020 towards predictions aligned with a clean energy transition and net-zero emissions commitments.
This year, the outlook has eliminated the previously considered pledges scenario. The IEA intended to evaluate new country climate targets for 2031-2035; however, insufficient submissions rendered this analysis unfeasible.
In the IEA’s stated policies scenario, which includes proposed but not necessarily enacted policies, oil demand is expected to peak around 2030. The agency clarified that its scenarios represent a variety of possible outcomes based on different assumptions, rather than definitive forecasts.
The report highlighted a significant rise in investment decisions for new liquefied natural gas (LNG) projects, with operations set to commence for about 300 billion cubic meters of new annual LNG export capacity by 2030, reflecting a 50% increase in supply.
Under the current policies scenario, the global LNG market is anticipated to grow from approximately 560 bcm in 2024 to 880 bcm in 2035, and 1,020 bcm by 2050, driven primarily by demand from the power sector, including the data center and AI industries.
Investment in data centers is expected to reach $580 billion in 2025, surpassing the $540 billion spent annually on global oil supply.
The report also outlines a net-zero scenario, detailing a pathway to reduce global energy emissions to net zero by 2050. Despite more than 190 countries committing at the 2015 Paris climate talks to limit global warming to below 1.5 degrees Celsius, the latest analysis suggests that this threshold will be exceeded in all scenarios, with a potential decline only achievable under the net-zero framework, provided that effective carbon dioxide removal technologies are deployed.
Special Analysis by Omanet | Navigate Oman’s Market
The International Energy Agency’s warning about growing global oil demand until 2050 creates both opportunities and risks for businesses in Oman. With the projected increase in liquefied natural gas (LNG) exports, there is a chance for Omani companies to expand their market share in energy, especially in response to rising demand driven by tech sectors. However, investors should remain cautious; the shift away from climate commitments raises the risk of future regulatory changes that could disrupt business operations focused on fossil fuels.
