LONDON – 2025 is shaping up as a milestone year for energy markets. Despite geopolitical turbulence and macroeconomic pressures, global investment is hitting record highs, and upstream oil and gas continues to play a central role alongside low-carbon energy.

The International Energy Agency (IEA) projects that global energy investment will reach $3.3 trillion in 2025, the highest level on record. Of this, approximately $2.2 trillion is directed towards renewables, grids, nuclear, storage and electrification, while around $1.1 trillion is allocated to oil, natural gas and coal. For upstream oil, capital expenditure is expected to fall by about 6% from 2024 levels, due to cost pressures and lower prices. Yet resilient demand ensures supply remains critical to global energy security.

Meeting medium-term demand

According to Wood Mackenzie, global liquids demand is set to climb from around 104 million bpd in 2025 to more than 108 million bpd by 2032 in their base case. In a delayed transition scenario, demand could be as much as 6 million bpd higher. To meet this trajectory, upstream capital spending must increase significantly, rising from approximately $507 billion per year under the base outlook to nearly $659 billion under a delayed transition, with total upstream investment to 2050 potentially reaching $17 trillion.

The IEA has reinforced this message, warning that inadequate investment in oil and gas supply risks tightening markets and amplifying volatility. As IEA Executive Director Fatih Birol stated earlier this year at CERAWeek, “some level of fossil fuel investment is still needed to meet demand and safeguard stability.”

Energy addition, not substitution

The notion of an “energy addition” rather than a strict “transition” is gaining traction. Global demand growth, particularly in Asia, means fossil fuels will remain part of the energy mix for decades. A key constraint on accelerating renewables is underinvestment in supply chains and enabling infrastructure. Without sufficient capital flowing into both hydrocarbons and low-carbon alternatives, the system risks shortfalls, volatility and affordability challenges.

Opportunities and competitive advantage

Emerging markets in Asia, Latin America and Africa present strong demand growth and relatively low-cost supply opportunities. In North America, unconventional oil and gas assets remain attractive for their short-cycle flexibility and ability to respond quickly to market shifts. At the same time, efficiency improvements and supply chain innovations are lowering breakeven costs, making new projects more competitive across multiple regions.

Conclusion: stability, clarity, pragmatism

2025 highlights that energy markets can be both ambitious and realistic. Record global investment, rising demand and the resilience of upstream oil and gas underline the sector’s enduring importance. Ensuring competitive and investable energy markets will require regulatory stability, balanced capital allocation and strong industry-government collaboration.

The companies and regions that align long-term vision with clear investment conditions will be best placed to thrive in the next energy cycle.

World Energy Capital Assembly 2025

Join us at the 16th edition of World Energy Capital Assmbely in London on 1-3 December & engage in three days of panel discussions, keynotes, private roundtable discussions and tailor-made lunches and dinners, designed to address the most critical elements shaping the energy transition, including capital allocation into the new energy system, shareholder returns, & evolving expectations.

WECA 2025 will bring together leaders from across the global energy value chain to explore how policy, capital and industry strategy can align to create the next chapter of investable energy markets.

The Energy Council 2025. For further information please contact Charlie Abrines, Group Managing Director | The Energy Council
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