Peak oil once instilled fear in politicians, businesses and consumers as a looming moment when the world might suck the last drops of black gold from the earth like a straw reaching the bottom of a milkshake.
The idea was popularised in the 1950s by geologist M. King Hubbert, who warned that US oil production would follow a bell-shaped curve and eventually reach an inevitable peak as fields developed and declined.
Climate change in recent years has flipped the perception. Instead of fear of scarcity, the debate now centres on when demand will finally peak as the shift to electric vehicles (EVs) and other clean energy sources gathers momentum.
At the same time, political resistance, from postponements to banning internal combustion engine vehicles to removing subsidies for EVs, has cast doubt on how quickly the transition away from fossil fuels will occur.
Experts are divided over when demand will peak
Opposing views have emerged on when global demand for oil will start to decline.
The International Energy Agency (IEA), a Paris-based organisation representing major oil consuming countries, predicts that demand will fall to around 102 million barrels per day (bpd) by 2030. In the World Energy Outlook 2025, released last month, the IEA’s main stated policy scenario assumes that governments will achieve ambitious energy and climate targets.
OPEC, the Organisation of Petroleum Exporting Countries, takes the opposite view. In its latest long-term forecast, the oil producer group predicts that demand will continue to grow for decades and will not see a peak until 2050, projecting that consumption will reach nearly 123 million bpd by mid-century.
The organisations share one major concern: supplies are becoming increasingly difficult to maintain. OPEC-Bel believes that steady demand growth will justify sustained investment to ensure its members have sufficient reserves for decades to come. The IEA, on the other hand, offers a more subdued outlook.
Business-as-usual scenario resumed
Under pressure from the Trump administration, the agency has reinstated a more conservative business-as-usual scenario for current policy, which was cancelled in 2020 and is based on current laws and observed trends that fall far short of climate ambitions.
This scenario assumes that supply growth will slow after 2028 as non-OPEC sources such as the US, Brazil, Guyana and Canada decline. This would lead to supply being dependent on OPEC countries in the Middle East, such as Saudi Arabia, the United Arab Emirates and Iraq.
Oil demand could rise to 113 million bpd by 2050 if climate pledges remain unmet, the IEA warned.
Franziska Holz, deputy head of energy, transport and environment at the German Institute for Economic Research (DIW Berlin), said the restoration of the conservative scenario is a “positive development” because it proves that the world is “not on track to meet our climate targets… [and] is not replacing fossil fuels in our energy mix fast enough.”
Holtz joked that “Americans probably didn’t envisage this” when they relied on the IEA to reinstate a more cautious scenario.
US oil production is stabilising, just as shale deposits are being depleted faster each year. Image: David McNew/Getty Images
New oil discoveries have bottomed out
When it comes to peak oil, both organisations point to the same basic risk: oil reserves won’t be able to take care of themselves. Old fields are rapidly depleting, and without sustained investment, production from existing fields will fall by around 8 per cent a year, the IEA warned in November.
Huge amounts of new production are required just to keep global oil supplies up. Yet much of the spending is aimed at compensating for declining production due to ageing fields, rather than bringing significant new production on stream.
With discoveries at historic lows and increasing reliance on rapidly depleting shale and deepwater wells, the oil sector is increasingly working to stay in place.
Antonio Turiel, a physicist and peak oil researcher at Spain’s CSIC institute, told DW that the fracking boom in the US, the engine of growth outside OPEC, is approaching exhaustion. The best places to drill in the Permian Basin, in Texas and New Mexico, have already been exploited and the rate of production decline is accelerating.
“After 15 intense years, we are nearing the end of the fracking road,” Turiel said. “We can maintain this mirage for another year or two, but then the decline will be incredibly rapid.”
The inevitable peak in oil production?
Turiel believes the world is approaching a much earlier peak in oil production than most agencies are willing to admit. He said 80 per cent of all oil fields are “already past peak production.”
, As with shale, he said, the world is relying too much on aging supergiant fields for stability, whose fastest decline phase is about to begin.
“We are likely to have a strong annual decline – about 5 per cent a year – even before 2030,” he said. “After that point, we can expect gross annual oil production to decline by about 50 per cent for 20 years.”
Turiel noted that from 2020 to 2025, an average of 3 billion barrels of oil per day was discovered – 12 times less than global consumption. And while OPEC doesn’t foresee peak oil, and the IEA’s worst-case scenario doesn’t foresee it by 2050, Turiel’s timeline is stark:
“Most likely by 2027, in any case before 2030,” he said. “Even sooner if some undesirable geopolitical problems arise.”
Few countries will make the transition to cleaner energy
Despite all the debate about when oil demand will peak, the distance between governments’ climate promises and their policies remains wide and growing. Only a few countries have established strong mechanisms to accelerate the clean energy transition, including Norway’s electromodel system. Policy, China’s clean technology industrial strategy, and the European Union’s climate laws.
By contrast, the United States under President Donald Trump has taken steps to expand domestic oil and gas production, loosen federal climate rules and reduce support for electric vehicles, which analysts say is likely to slow the global transition away from fossil fuels.
Jeff Colgan, a political science professor at Brown University in Rhode Island, told DW that the Trump administration is not only undoing his predecessor Joe Biden’s efforts to support US green industry policies. More fundamentally, Colgan said, the Trump administration is “attacking” the science and institutions in the US government that promote climate policy.
“This has implications not only for US environmental policy, but will have ripple effects around the world,” he said.
Editor: Uwe Hessler