Oil Predicted for High Demand Out to 2025 and Beyond

by | Sep 16, 2024 | International Energy Agency (IEA), Crude, Demand, Fossil Fuel, Production, Supply, United States

This growing divide could slow the global transition to green energy.

Energy Majors Say Oil is Here to Stay: What This Means for American Energy Independence

Despite predictions from international energy organizations that global oil demand could begin declining by the end of the decade, some major oil companies expect demand to stay high for many years. ExxonMobil and Aramco, two of the biggest players in the oil industry, plan to continue producing crude oil, anticipating strong global demand for fossil fuels well into the next decade and beyond.

According to the International Energy Agency (IEA), the global demand for oil and gas is likely to peak by 2030, as governments invest more in renewable energy and electric vehicles (EVs). IEA Executive Director Fatih Birol stated, “The transition to clean energy is happening worldwide, and it’s unstoppable. It’s not a question of ‘if,’ it’s just a matter of ‘how soon’ – and the sooner, the better for all of us.” However, even after 2030, gas and oil demand is expected to stay near peak levels for another two decades.

While the IEA has urged energy companies to halt investments in new fossil fuel projects and instead focus on renewable energy, ExxonMobil disagrees. In its recent forecast, the U.S. oil major predicted that oil and gas will still contribute over half of the world’s energy mix in 2050, despite increased efforts toward a green transition. Fossil fuels currently make up about 80% of global energy, and Exxon believes that even with EV adoption, oil demand will remain strong, particularly for industries like manufacturing, chemicals, and heavy transportation. Exxon has warned that without continued investment in new oil and gas projects, the world risks facing supply shocks, which could drive up prices and trigger economic crises.

Similarly, British oil giant BP has suggested that while oil demand could peak by 2025, it will remain high for at least another decade. BP’s latest Energy Outlook predicts that demand will only slightly decrease from 100 million barrels per day (bpd) today to around 97.8 million bpd by 2035. The company highlights that while wealthier nations push for renewable energy, many low-income countries are still industrializing and increasing their demand for fossil fuels. This growing divide could slow the global transition to green energy.

With companies like Exxon, BP, and Aramco predicting continued demand for oil, the future of fossil fuels is far from settled. While renewable energy is expanding, major oil firms are betting that fossil fuels will remain essential for decades to come, particularly in emerging markets.

What This Means for Direct Participation Investments in Oil and Natural Gas

For investors considering direct participation in the oil and natural gas sector, this continued demand forecast could signal opportunity. As oil majors like ExxonMobil and Aramco project sustained global need for oil, investment in new production and drilling projects may provide strong returns for years to come. Despite the push for renewable energy, fossil fuels still account for the majority of the global energy mix, and demand is expected to remain robust in industrial and transportation sectors, particularly in developing economies.

Additionally, Exxon’s warning about the risk of supply shocks suggests that limited production could lead to higher prices, making direct participation investments more attractive for those looking to capitalize on potential price increases. With the U.S. continuing to play a major role in global oil production, particularly in regions like the Permian Basin, American investors in the energy sector may find that now is a pivotal time to consider such investments.

In short, while the world transitions toward renewable energy, oil and natural gas will likely remain a crucial part of the energy landscape for decades. Direct participation in oil and gas drilling offers investors the potential to benefit from this prolonged demand, with the added advantage of supporting American energy independence and domestic production.

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