IEA Upends 'Peak Oil' Narrative in New Long-Term Demand Forecast
In a significant reversal, the energy watchdog's latest outlook includes a scenario where oil demand grows until 2050, bolstering prospects for the fossil fuel industry.
The International Energy Agency has dramatically altered its long-term outlook for oil, reintroducing a scenario where global demand continues to grow until the middle of the century. The forecast challenges years of consensus that a definitive peak in consumption was imminent and provides a powerful new narrative for sustained investment in fossil fuels.
In its latest World Energy Outlook, the Paris-based agency presented a 'Current Policies Scenario' (CPS) projecting that global oil demand could rise to 113 million barrels per day by 2050. This marks a stark reversal from forecasts issued since 2020, which had guided market expectations toward a peak before 2030. The shift suggests a much longer runway for oil and gas producers, rattling assumptions that have underpinned both government policy and ESG-driven investment strategies.
The revision offers a significant tailwind for energy giants like ExxonMobil, with a market capitalization of nearly $500 billion, and Chevron, valued at over $300 billion. Both companies have faced pressure to curtail long-term hydrocarbon projects amid fears of 'stranded assets' in a rapidly decarbonizing world. This new projection could be used to justify expanded capital expenditure in exploration and production. ExxonMobil shares were recently trading near their 52-week high, reflecting existing strength in the sector.
This more bullish case for oil is not the IEA's central forecast but rather a scenario based on the world continuing on its present trajectory without the implementation of new, more aggressive climate policies. The agency's main 'Stated Policies Scenario' (STEPS), which assumes governments meet their current climate pledges, still anticipates demand peaking around 2030 at 102 million barrels per day before declining modestly to 97 million by 2050, according to analysis from Argus Media.
However, the simple re-emergence of a 'no peak oil' scenario from the influential watchdog is significant. It reflects a pragmatic acknowledgment of persistent demand growth in developing economies, particularly in Asia and Africa, and the immense challenge of displacing oil from sectors like aviation, shipping, and petrochemicals.
"The WEO 2025’s projections highlight the immense scale of the task ahead," the official IEA report states, emphasizing the gap between current trends and climate goals. The agency warns that the trajectory outlined in its Current Policies Scenario is aligned with global warming of nearly 3°C by the end of the century, far exceeding the 1.5°C target set by the Paris Agreement.
For investors, the report complicates the energy transition narrative. It suggests that while the shift to renewables is underway, the world's reliance on oil will be more durable than previously anticipated. This outlook implies sustained pricing power for producers and potentially higher long-term energy prices, as the IEA notes that significant upstream investment will be required to meet this projected demand and avoid supply shortfalls.
The IEA's updated forecast serves as a critical stress test for climate policy and a sobering reminder of the entrenched role of fossil fuels in the global economy. While the path to net-zero remains the stated goal of many nations, the agency's latest numbers suggest the road ahead may be longer and more carbon-intensive than the market had been led to believe.