The concept of peak oil once haunted the global landscape with the fear of depleting oil reserves, akin to finishing the last sip of a milkshake through a straw.
In the 1950s, geologist M. King Hubbert introduced the idea, suggesting that US oil production would eventually peak and decline as oil fields aged.
However, the focus has shifted in recent years due to climate change. The current discussion revolves around when oil demand will peak, prompted by the increasing adoption of electric vehicles (EVs) and cleaner energy sources. Yet, political resistance, including delays in banning combustion-engine cars and reductions in EV subsidies, raises uncertainties about how swiftly the transition from fossil fuels will occur.
Experts Divided Over Oil Demand Peak
There is a split among experts regarding when global oil demand will begin to fall.
The International Energy Agency (IEA), based in Paris and representing major oil-consuming nations, anticipates that demand will stabilize at approximately 102 million barrels per day (bpd) by 2030. In its World Energy Outlook 2025, published recently, the IEA outlines a scenario where governments achieve ambitious energy and climate objectives.
Conversely, OPEC, the Organization of the Petroleum Exporting Countries, predicts the opposite. In its latest long-term outlook, the group foresees demand continuing to rise, with no peak before 2050, estimating consumption will reach nearly 123 million bpd by mid-century.
Both organizations acknowledge a common challenge: sustaining supply is becoming increasingly difficult. OPEC asserts that strong demand growth justifies ongoing investment to secure ample reserves from its members. The IEA, however, presents a more cautious perspective.
‘Business as Usual’ Scenario Revived
Influenced by the Trump administration, the IEA reinstated its conservative Current Policies Scenario, initially abandoned in 2020, which is based on existing laws and trends that fall short of climate ambitions.
This scenario suggests that supply growth will decelerate post-2028 due to waning non-OPEC sources like the United States, Brazil, Guyana, and Canada. This shift would leave supply dependent on Middle East OPEC countries such as Saudi Arabia, the United Arab Emirates, and Iraq.
The IEA warns that oil demand could rise to 113 million bpd by 2050 if climate pledges go unfulfilled.
Franziska Holz, deputy head of the energy, transportation, and environment department at the German Institute for Economic Research (DIW Berlin), commented on the reinstatement of the conservative scenario, calling it a “positive” development as it indicates that “we are not on track with our climate targets … [and] not fast enough in replacing fossil fuels in our energy mix.”
Holz humorously noted that the “Americans had probably not intended that” when they pressured the IEA to reinstate the more conservative scenario.
New Oil Discoveries Hit a Low
Both organizations highlight a critical concern: oil supply management is increasingly challenging. The IEA warned that without consistent investment, production from existing fields could decline by about 8% annually.
Significant new output is essential just to maintain the global oil supply. However, most spending is directed towards offsetting declines from aging fields rather than fostering new production.
With discoveries at an all-time low and increasing reliance on fast-depleting shale and deepwater wells, the oil industry is struggling to keep pace.
Antonio Turiel, a physicist and Peak Oil researcher at Spain’s CSIC institute, informed DW that the US fracking boom, which has driven non-OPEC growth, is nearing its end. The prime drilling areas in the Permian Basin, Texas and New Mexico, have been exploited, and decline rates are accelerating.
“After 15 intense years, we are arriving at the end of the fracking road,” Turiel noted. “We can keep up the mirage for an additional year or two, but afterwards the fall is going to be incredibly fast.”
Is an Oil Production Peak Imminent?
Turiel believes the world is closer to a Peak Oil event than most agencies acknowledge. He claimed that 80% of all oil fields “are already past their peak production.”
He also pointed out that the world has overly depended on aging supergiant fields for stability, which are about to enter their most rapid decline phase.
“Most likely, we will start having strong annual declines — circa 5% annually — even before 2030,” he stated. “After that point, expect a decline in the gross amount of oil extracted yearly of about 50% in 20 years.”
Turiel highlighted that from 2020 to 2025, only an average of 3 billion bpd of oil was discovered — significantly less than global consumption. Despite OPEC’s belief that a Peak Oil scenario is unlikely, and the IEA’s worst-case scenario seeing none by 2050, Turiel’s projection is stark:
“Most probably by 2027, in any case before 2030,” he indicated. “Even sooner if some undesirable geopolitical problems unfold.”
Challenges in Transitioning to Cleaner Energy
Despite discussions on when oil demand might peak, the gap between government climate commitments and actual policies is widening. Only a select few countries have implemented robust frameworks to accelerate the transition to clean energy, such as Norway’s EV initiatives, China’s clean-tech strategy, and the European Union’s climate laws.
In contrast, the United States, under President Donald Trump, has expanded domestic oil and gas production, weakened federal climate regulations, and scaled back support for EVs, potentially slowing the global shift away from fossil fuels.
Jeff Colgan, a political science professor at Brown University, stated that the Trump administration is not only reversing efforts by Joe Biden to support US green policies but is also “attacking” the science and institutions that have supported climate policy in the US government.
“That has implications not only for US environmental policy, but will have ripple effects around the world,” Colgan remarked.
Edited by: Uwe Hessler
Original Story at www.dw.com