World oil and gas demand could grow until 2050, IEA says

The International Energy Agency (IEA) has significantly revised its energy outlook, now projecting global oil and gas demand growth until 2050 under a "current policies" scenario, a departure from its previous clean energy focus and following U.S. criticism. This updated forecast anticipates oil demand reaching 113 million barrels per day by mid-century and global energy demand increasing 15% by 2035. Notably, LNG capacity is expected to surge 50% by 2030, reaching 1,020 bcm by 2050, largely driven by rising power sector demand from data centers and AI, with data center investments potentially surpassing global oil supply spending by 2025. The IEA's new stance, based on existing government policies rather than climate aspirations, also indicates the world will likely fail to meet the 1.5C climate goal.

Analysis

The International Energy Agency (IEA) has significantly revised its energy outlook, now projecting global oil and gas demand growth until 2050 under a "current policies" scenario, a notable departure from its previous clean energy focus. This updated forecast, influenced by U.S. criticism, anticipates oil demand reaching 113 million barrels per day by mid-century, a 13% increase from 2024, and global energy demand climbing 15% by 2035. This scenario reflects existing government policies rather than climate aspirations, indicating a less aggressive energy transition than previously envisioned.

A key driver of this demand is the surging liquefied natural gas (LNG) market, with new export capacity expected to increase by 50% (300 bcm) by 2030, reaching 1,020 bcm by 2050. This growth is primarily fueled by rising power sector demand from data centers and artificial intelligence. Global investment in data centers is projected to reach $580 billion in 2025, potentially surpassing the $540 billion spent annually on oil supply.

The revised outlook also implies a likely failure to meet the 1.5 degrees Celsius climate goal, as the world is shown surpassing this target in all IEA scenarios. This underscores a widening gap between current policies and climate ambitions, despite pledges made at the Paris climate talks. The IEA's restoration of the "current policies" scenario highlights the diverse energy choices governments are making globally.

Key Decisions for Investors

• Consider increased long-term exposure to traditional energy sectors, particularly oil and gas, given the IEA's revised demand growth projections until 2050.
• Evaluate investment opportunities in LNG infrastructure and producers, as significant capacity expansion and demand growth are anticipated, driven by data center and AI power needs.
• Monitor policy developments and geopolitical influences on energy markets, as the IEA's shift reflects a divergence in government approaches to energy transition and climate goals.