Oil and gas demand to rise for 25 years is the warning issued by the International Energy Agency (IEA) in its latest global report, signalling that unless the world alters its policy trajectory, fossil‑fuel consumption will continue ascending into the mid‑century. This projection merits the close attention of international investors seeking to calibrate strategy in an evolving energy landscape.
A shifting scenario: the “Current Policies” path
In its 2025 edition of the World Energy Outlook 2025, the IEA introduces a scenario often referred to as “Current Policies” (CPS), in which existing laws and regulations remain unchanged and no further climate or energy‑transition policies are enacted. Under this framework, demand for oil rises from roughly 100 million barrels per day in 2024 to about 113 million barrels per day by 2050. Natural‑gas demand is projected to increase similarly, particularly in developing economies, further reinforcing the notion that fossil fuels remain central. Within this scenario, CO₂ emissions stagnate rather than decline meaningfully, rendering the attainment of 1.5 °C warming limits all but impossible.
Underlying drivers of extended fossil‑fuel demand
Several structural factors explain why oil and gas demand could remain elevated over the next two‑and‑a‑half decades. First, growth in energy demand is heavily concentrated in emerging markets, regions such as India, Southeast Asia, the Middle East and parts of Latin America will drive mobility, industrialisation and appliance ownership, supporting elevated requirements for oil and gas. Second, the pace of transition towards electric vehicles, energy‑efficiency improvements and other decarbonising technologies is assumed to slow in many regions under the CPS, especially outside China and Europe where policy‑support is strongest. Third, energy‑security and affordability considerations have regained prominence globally. Governments and industries, especially in developing economies, place high value on reliable supply, which tends to favour existing fossil‑fuel assets.
Implications for the international investor community
For international investors, the IEA’s projection that oil and gas demand will rise for 25 years under the status quo presents both opportunity and risk. On the one hand, if demand remains robust, companies active in upstream oil and gas, LNG infrastructure, petrochemicals and related mid‑stream segments may realise sustained cash flows and favourable valuation support. The assumption of rising demand strengthens the investment case for those sectors. On the other hand, the extended dominance of fossil fuels doesn’t remove the transition risks, should policy accelerate, technological disruption spike or ESG pressure intensify, assets tied to fossil production may face abrupt devaluation. In other words, this forecast underscores the importance of scenario analysis: investors must simultaneously position for higher fossil‑fuel demand and for the possibility that a faster‑than‑expected shift reduces that demand significantly.
Strategic outlook: balancing the transition and resilience
By emphasising that oil and gas demand could rise for 25 years, the IEA invites investors to adopt a dual‑track strategy. One track acknowledges the reality of a prolonged fossil‑fuel era, meaning investment in production, infrastructure and supply chains in regions with growing demand could be justified. The other track anticipates that, even within this extended period, transition pressures may emerge abruptly, so exposure to clean‑energy technologies, alternative fuels and companies with credible transition plans remains essential. Geographically, the growth dynamic is shifting: advanced economies may dominate less of the demand‑growth story, while emerging markets become central. Therefore, investment strategies that focus on Asia, Latin America or the Middle East may yield differentiated returns, albeit with greater geopolitical, regulatory and execution risks.
Conclusion
The message from the IEA that oil and gas demand to rise for 25 years is a paradigm‑shifting alert for global investors. It invites a re‑examination of long‑held assumptions about the imminent decline of fossil fuels and calls for robust strategy frameworks that incorporate both sustained fossil‑fuel demand and the ever‑present possibility of transition acceleration. Strategic clarity, scenario planning and geographic diversification thus remain critical for investors navigating the future energy economy.
