After years of warning that global oil demand was approaching a peak, the International Energy Agency has recently presented a more cautious view. In its latest World Energy Outlook, the IEA highlights that under current policies, oil consumption may continue to grow well beyond earlier expectations. This reassessment is based on the agency’s Current Policies Scenario, which assumes no major additional policy action beyond what governments have already implemented (International Energy Agency, 2025).

Under this scenario, global oil demand increases from roughly 100 million barrels per day in the mid-2020s to about 113 million barrels per day by 2050. Instead of entering a period of stability, consumption continues to rise gradually, reflecting slower structural change in key sectors of the global economy (International Energy Agency, 2025).

Slower Transition in Transport and Persistent Fossil Fuel Use

One of the key drivers behind the revised outlook is the transport sector. While electric vehicle adoption continues to expand, the pace of uptake has been uneven across regions. In many countries, high vehicle costs, insufficient charging infrastructure, and policy uncertainty have slowed the replacement of internal combustion engines. As a result, oil demand in road transport declines more slowly than previously anticipated (International Energy Agency, 2025).

At the same time, oil consumption remains strong in sectors where alternatives are limited or costly. Aviation, shipping, and petrochemicals continue to rely heavily on oil, and demand in these areas is expected to grow in line with population growth and economic development. These dynamics help explain why global oil demand remains resilient even as renewable energy deployment accelerates in the power sector.

Price Implications and Supply Requirements

The IEA’s Current Policies Scenario also carries implications for oil markets. Continued demand growth requires sustained upstream investment to offset natural production declines and supply additional volumes. In this context, the IEA suggests that oil prices could remain elevated, with levels approaching 90 dollars per barrel by the mid-2030s under certain market conditions (International Energy Agency, 2025).

This outlook reflects a tension that has become increasingly visible in energy markets. Expectations of a rapid transition have discouraged long-term investment in oil supply, yet demand under current policies remains strong enough to require continued production. Without sufficient investment, supply tightness and price volatility become more likely.

Reaction from Oil Producers

OPEC described the scenario as a more realistic reflection of current economic and political conditions, arguing that it confirms the continued importance of oil in the global energy system. From the producers’ perspective, the outlook supports calls for stable investment to avoid future supply disruptions (Organization of the Petroleum Exporting Countries, 2025).

This response highlights the broader role of energy outlooks in shaping market expectations. While the IEA continues to present scenarios in which oil demand peaks earlier under stronger policies, the renewed attention to current policy outcomes reinforces the view that fossil fuels remain central to the global economy for longer than many transition scenarios suggest.

Climate Policy Context and COP30

The updated outlook comes at a sensitive moment for global climate policy. World leaders are gathering for COP30 in Brazil, where discussions once again focus on closing the gap between long-term climate targets and near-term policy implementation. The IEA’s findings underline the challenge facing policymakers: without stronger and more consistent action, current trajectories remain misaligned with net zero ambitions (UNFCCC, 2025).

Rather than rejecting the energy transition, the Current Policies Scenario illustrates the consequences of delayed or fragmented implementation. It shows that ambition alone is insufficient if it is not backed by effective regulation, investment, and political continuity.

Implications for Investors and Energy Markets

For investors, the IEA’s reassessment offers a reminder that the energy transition is unlikely to follow a smooth or predictable path. Continued oil demand growth under current policies suggests that fossil fuel assets may retain economic relevance longer than some models assume. At the same time, delayed transition increases long-term regulatory and policy risk, as stronger measures may be required later to meet climate objectives.

Overall, the IEA’s revised outlook does not signal a reversal of the transition, but a recalibration of expectations. Under existing policies, oil demand can continue to grow, and the timeline for structural change remains uncertain. The pace of the transition will depend less on technological availability and more on the consistency and credibility of policy action in the years ahead.

References

International Energy Agency. (2025a). World Energy Outlook 2025. International Energy Agency.
https://www.iea.org/reports/world-energy-outlook-2025

International Energy Agency. (2025b). Current Policies Scenario. In World Energy Outlook 2025. International Energy Agency.

https://www.iea.org/reports/world-energy-outlook-2025/current-policies-scenario

Organization of the Petroleum Exporting Countries. (2025). The IEA’s rendezvous with reality. OPEC.
https://www.opec.org/opec_web/en/press_room/7372.htm

United Nations Framework Convention on Climate Change. (2025). COP30 overview. UNFCCC.
https://unfccc.int/cop30