IEA Shifts Outlook: Oil and Gas Demand May Not Peak Until Mid-Century
The International Energy Agency (IEA) now expects global oil and gas demand to keep rising until 2050, reversing earlier assumptions that fossil fuel consumption would peak this decade. The updated projection follows criticism from U.S. officials who argued the agency focused too heavily on clean energy policies in previous reports.
This marks a significant departure from the IEA’s earlier stance under the Biden administration, when it forecasted a near-term oil demand peak and recommended halting investment in new fossil fuel projects to meet global net-zero goals by 2050.
1.5°C Climate Target Slipping Out of Reach, IEA Warns
The 2025 outlook delivers a stark message: the world is unlikely to limit global warming to 1.5°C, the threshold scientists say is required to prevent the most severe climate impacts.
Despite commitments made by more than 190 countries during the 2015 Paris Agreement, the IEA says no scenario in this year’s report keeps warming under the limit.
Environmental groups echoed the alarm.
Greenpeace adviser Kaisa Kosonen urged governments at COP30 to agree on an emergency plan to bridge what she called the “1.5°C ambition gap.”
U.S. Pressure and the Debate Over ‘Peak Oil’
The United States — the IEA’s largest financial contributor — has strongly pushed the agency to acknowledge continued fossil fuel demand amid rising geopolitical and energy-market challenges.
Trump administration officials were especially critical of prior IEA forecasts:
- Energy Secretary Chris Wright called the agency’s peak-demand projections “nonsensical.”
- Oil producers, including OPEC, also dismissed the idea of an imminent demand peak.
- OPEC noted it hopes the world has moved past what it called the “misguided notion of ‘peak oil.’”
The IEA said it reinstated its current policies scenario because governments are increasingly diverging on climate action and energy strategies.
Oil Demand Could Hit 113 Million Barrels a Day by 2050
Under the current policies scenario:
- Global oil demand may reach 113 million barrels/day by 2050, up 13% from 2024 levels.
- Global energy demand is set to rise 15% by 2035.
These projections are based strictly on existing government policies, not climate pledges or long-term emissions goals.
The report also notes a separate “stated policies” scenario — which includes proposed but not yet enacted measures — under which oil demand peaks around 2030.
This difference is driven largely by varying expectations for electric vehicle (EV) adoption.
LNG Capacity Set for Massive Expansion
The IEA highlights a major surge in global LNG investment:
- Final investment decisions for new LNG projects jumped sharply in 2025.
- Around 300 bcm of new annual LNG export capacity will come online by 2030, a 50% increase over today.
- LNG market demand is projected to rise from 560 bcm in 2024 to 880 bcm by 2035, and 1,020 bcm by 2050.
Much of this new demand is expected to come from power-hungry data centers and AI infrastructure.
Global data center investment is forecasted to reach $580 billion in 2025, surpassing annual global oil supply investment for the first time.
Net-Zero Scenario Included — But Not Achievable Under Current Trends
The IEA included a scenario outlining a pathway to net-zero emissions by 2050, but emphasizes that:
- No major economy is currently on track
- Insufficient climate pledges forced the agency to drop its “pledges scenario” this year
- All scenarios project global temperatures exceeding the 1.5°C threshold
The gap between ambition and policy remains wide, the IEA said, and urgent action is needed to avoid more severe climate impacts.
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