Oil Demand Rises to 2050: AI, Transport, and Petrochemicals Sustain Growth

The International Energy Agency (IEA) has revised its long-term energy outlook, predicting that global oil and gas demand could persist until 2050, upending earlier forecasts that had anticipated a peak in fossil fuel consumption this decade, according to a Reuters report. The agency's annual World Energy Outlook, released in November 2025, underscores a pivotal shift in energy markets, driven by evolving geopolitical dynamics, technological advancements, and the uneven pace of the clean energy transition.

Under the IEA's current policies scenario, oil demand is projected to reach 113 million barrels per day (bpd) by 2050, a 13% increase from 2024 levels, as noted in a Yahoo Finance piece. This reversal from prior predictions of an early peak reflects sustained demand in sectors like transportation, petrochemicals, and emerging applications in AI-driven data centers. Meanwhile, global energy demand is forecasted to rise by 90 exajoules by 2035, with electricity growth outpacing overall energy consumption, as detailed in a Fortune analysis. The IEA attributes this surge to electrification trends, including heating, cooling, and AI infrastructure, which now account for a significant share of energy use.

Non-OPEC oil producers are poised to play a critical role in balancing this evolving landscape. A Yahoo report highlights that Brazil, Guyana, and Argentina will lead a new wave of cost-competitive oil supply through 2030, with South American projects accounting for nearly 60% of new conventional oil capacity. Offshore Brazil's pre-salt fields, operated by Petrobras, and Argentina's Vaca Muerta shale play are expected to offset slower U.S. shale growth, contributing 560,000 bpd of crude and condensate by 2030. Radhika Bansal, VP of Upstream Research at Rystad, emphasized that sustained investment in these regions will be essential to address widening supply gaps after the mid-2030s.

India, meanwhile, is emerging as a key driver of global energy demand. The IEA reports that India's energy consumption will grow by over 15 exajoules by 2035, fueled by rapid urbanization, industrial expansion, and a surge in vehicle ownership, as noted in a Business Standard article. The country's clean energy transition has accelerated, with non-fossil grid-connected power capacity reaching 50% in 2025—five years ahead of the 2030 target. This growth is supported by a 1:4 investment ratio favoring renewables over fossil fuels, with solar PV attracting $113 billion in cumulative investment since 2015.

Despite these developments, the IEA warns that the global energy system is unprepared for the rapid rise in electricity demand, which is expected to grow by 40% over the next decade, according to a Fortune analysis. Renewable energy, particularly solar, will expand faster than any other source, but coal and oil demand are unlikely to peak before 2030. The agency also notes a resurgence in natural gas projects, driven by U.S. policy shifts and increased LNG capacity, which could reach 1.02 trillion cubic meters by 2050, as detailed in the Reuters report.

The report highlights the dual challenge of meeting energy needs while addressing climate goals. While renewable investments now outstrip those in oil supply, the IEA estimates that 730 million people still lack electricity access, and nearly a quarter of the global population relies on inefficient cooking methods. Fatih Birol, IEA Executive Director, stressed that electricity growth is no longer confined to emerging economies, with advanced economies also seeing rising demand, as noted in the Reuters report.