The IEA's most recent report is grabbing plenty of headlines, with some accusing the organisation of “bending to political pressure” after it backtracked on its previous prediction that oil demand would peak by 2030. While the reason for this U-turn is indeed questionable, as the agency's estimates should always have been data-driven, it should be seen as a welcome shift. If we stop looking at energy consumption only via electricity and look instead at the whole picture, it becomes clear that demand, especially in the Global South, is only going one way.
This latest World Energy Outlook highlights that oil demand will increase to 113 million barrels per day by 2050, representing a 13% jump from 2024 levels. This is in stark contrast to their previous reports that saw oil demand peaking or plateauing by 2030.
As of 2025, almost 1.5 billion people don’t have access to clean cooking fuels. Around 2.8 billion people around the world don’t have adequate housing, and most of them are concentrated in low- and middle-income countries. A similar number of people (2.3 billion) face moderate to severe food insecurity. Overall, there are billions in the world that need and will hopefully experience an economic transformation, improving their general standard of living. As that happens, the demand for housing (cement, steel), food (ammonia), plastics (as consumption goes up), cars, air-conditioners, mobile phones, etc, will increase. Most of these will require a consistent flow of fossil fuels or their derivative energy and materials.
History shows that as a population increases and people's lives improve, the amount of energy used also grows. When the global population increased from 1 billion in 1800 to 6.1 billion in 2000, the supply of useful energy also moved up in tandem from 0.05 GJ per capita in 1800 to 28 GJ per capita in 2000. This is a staggering 560-fold or 56,000% increase.
Even if we look at wider trends, the need for oil and gas will only increase. Look at the rate of urbanisation. In Africa, for example, the population is projected to double by 2050, with 60% of them expected to be dwelling in cities. Where is the necessary power going to come from to sustain such growth? Renewable energy? Certainly. Renewable systems lack the scale and technical prowess at this point to substitute fossil fuels (I will write more about this someday). Of course, it will require more fossil fuels, with oil and gas as the most important. Hence, it comes as no surprise that IRENA estimates that total energy demand in Africa will double by 2040.
India is another example. Even the most conservative estimates have the country’s oil use rising from 5.5 mbpd in 2024 to 8 mbpd in 2035. As per the IEA’s own assessment, the country will be responsible for the largest increase in oil demand through 2035. Energy demand is expected to increase by 3% every year until 2035, which will be the fastest in emerging economies.
The hype around decarbonization or EVs needs to be put into context as well. As of 2024, the share of EVs of the global passenger car fleet stood at only 4%, meaning 96% are still ICE (internal combustion engine). Even if we take IEA’s SPS (Stated Policies Scenario), the EV fleet is expected to hit 585 million (excluding 2/3 wheelers), even then, it would be 30% of the global car fleet.
Context is critical. There are multiple rosy outlooks available that show how green energy will take over the world. However, reality is rarely as glamorous as movies and novels frequently lead us to believe. The reality of oil demand stands as discussed above. So while there may or may not be a political element to the IEA’s latest shift, its conclusion definitely is correct.
By Osama Rizvi for Oilprice.com