$18 Trillion or Total Nonsense? The Oil Demand Divide
The world needs $18.2 trillion in new oil and gas investments in the period until 2050 in order to secure a sufficient supply. This is what OPEC warned in the 2025 edition of its World Oil Outlook. Yet the International Energy Agency continues to believe oil demand growth is going to peak before 2030, suggesting there is no such need for investments. Are both talking up their respective book?
According to OPEC, global oil demand will reach 123 million barrels daily in 2050. That would be up from a projected 105 million barrels daily this year, per OPEC, or 104.4 million barrels daily per the International Energy Agency.
According to the IEA, oil demand is already plateauing in certain parts of the world, most notably in China, which has been the biggest driver of demand growth for about three decades now. Yet, electric car penetration and alternatives to diesel trucks are sapping this demand growth, on course to bring peak oil demand to China.
India has emerged as the next China in terms of oil demand growth. Yet India is still a much smaller oil consumer than China, and it is unclear whether it will ever catch up to China in terms of absolute numbers. For context, China’s average daily consumption rate in 2023 was 16.4 million bpd, compared with 5.3 million bpd for India, per data from the U.S. Energy Information Administration.
It is worth noting, too, that India is, like China, highly motivated to diversify away from oil because of its heavy reliance on imports and, consequently, international prices. That is why India has some of the most ambitious energy transition plans. It’s about energy supply security as much as it is about emissions, if not more.
The rate of global demand growth, then, remains rather uncertain, especially as Chinese EV makers take to international markets to sell their products at much lower prices than local manufacturers in, for example, Europe. Affordability is a big problem for most car buyers. Remove that problem, and EV penetration may well increase, affecting crude oil demand.
So, it’s time to turn to natural gas, which is also a hydrocarbon, which was once called a bridge fuel to a net-zero economy and then promptly demonized as even dirtier than coal and bundled with oil and coal as inadmissible in a low-carbon system of human civilization.
Global electricity demand is set for a prolonged surge amid a heating up race in the IT sector to out-develop everyone else’s artificial intelligence programs. AI is all the rage, and it consumes massive amounts of electricity. Despite hopes and dreams of this electricity being supplied from wind and solar installations, Big Tech is hunting deals for long-term electricity supply from nuclear and gas-fired generators. It would be a safe bet to make that they would not refuse coal generation, either, if it comes to that.
So, oil demand growth may be slowing on a global level but, first, it has yet to peak and it might take longer than the IEA believes, and second, even a peak would not mean a consequent sharp drop. As for natural gas demand, that is going to grow and grow quite strongly—unless Big Tech suddenly decides to drop its AI race ambitions. Even in the absence of such ambitions, the world’s electrification, per transition plans, would mean a steady increase in demand, especially for reliable, round-the-clock energy supply.
As for OPEC and IEA, and talking up one’s book, U.S. Energy Secretary Chris Wright recently said the U.S. may pull out of the IEA due to its biased demand projections, which Wright called “total nonsense”.
