Transformations in the Global Energy Sector and Market Balance
After a turbulent year in 2024, in which both the conventional and renewable energy sectors faced immense challenges stemming from supply and demand imbalances, escalating geopolitical tensions, and weaker macroeconomic performance, the outlook for 2025 appears more optimistic. This vital sector, which forms the backbone of global economic activity, is entering a delicate transitional phase where considerations of energy security, the shift to clean and renewable sources, and adaptation to a more fragile economic reality intersect.
Decisions by US President Donald Trump in his second term to raise tariffs and declare a "national energy emergency", alongside his desire to lower fuel prices for American consumers, have further complicated the landscape, added pressure on markets, and deepened the sense of anticipation prevailing across the energy world. Nevertheless, the sector is expected to witness positive shifts despite a global climate clouded by uncertainty, sustained momentum toward transforming the global energy mix, and a growing focus on clean and renewable sources.
In this context, a report by the International Energy Agency (IEA) published in early March 2025 indicates that global demand for energy, including oil, natural gas, coal, renewables, and nuclear power, will rise this year at a faster pace than in previous years. Notably, global energy demand grew by 2.2% in 2024, well above the average annual rate of just 1.3% recorded between 2013 and 2023.
Emerging and developing economies accounted for more than 80% of this growth in global energy demand in 2024. China recorded the largest share of energy demand growth, despite slowing to under 3% in 2024, while India posted the second-largest increase in energy demand in absolute terms, surpassing the combined increase across all advanced economies.
Advanced economies, for their part, saw a notable return to energy demand growth after years of decline, with demand rising by nearly 1%. The United States recorded the third-largest growth in demand in 2024, behind China and India. Energy demand in the European Union also returned to growth for the first time since 2017, excluding the post-Covid rebound in 2021.
Renewables accounted for the largest share of growth in total energy supply at 38%, followed by natural gas at 28%, coal at 15%, oil at 11%, and nuclear power at 8%. One driver of this increase was the high temperatures recorded over the past year, which added 0.3 percentage points to the 2.2% growth rate, while the improvement in the energy intensity of the global economy was limited to just 1%, reflecting its continued slowdown in recent years.
Electricity, particularly from low-emissions sources, recorded the highest growth rate among energy sources, with demand rising by 4.3% in 2024, nearly double the growth rate of total energy demand. This surge was driven by greater reliance on power-intensive equipment such as air conditioners and cooling systems, advanced manufacturing, data centers, and artificial intelligence, as well as increasing electrification across various end uses.
Nuclear power also saw an increase in new investment due to a range of strategic, economic, and even environmental factors that have brought it back into focus, with more than 7 gigawatts brought online in 2024, a 33% increase over 2023. This new capacity represents the fifth-highest annual level in the past three decades. Electricity generation from nuclear power rose by 100 terawatt-hours in 2024, matching the largest increase this century outside the post-Covid rebound.
Among fossil fuels, natural gas posted the strongest growth, rising by 2.7% in 2024 to reach 115 billion cubic meters, compared with an annual average of 75 billion cubic meters over the past decade. China recorded the highest rate of gas demand growth at more than 7%, or 30 billion cubic meters, while demand in the United States rose by around 2% and consumption growth in the European Union remained modest.
Oil's share of total energy demand, meanwhile, fell below 30% for the first time, down from 46% five decades ago. This decline is attributed to the expansion of renewable energy and low-emissions electricity, alongside a growing shift in consumption patterns. Oil demand in global road transport fell, particularly in China (by 1.8%) and in advanced economies (by 0.3%), as a result of rising electric vehicle adoption and improved fuel efficiency, whereas demand increased in the aviation and petrochemical sectors.
Conversely, capital investment in conventional energy and natural resources is expected to continue rising to record levels, increasing by 6% in real terms compared with 2024, even though the output increase planned by OPEC+ countries in 2025 does not require expanding their current investments. Rather, the rise in capital expenditure reflects the enduring central role of conventional energy sources, despite the growing share of renewables in the global energy mix.
On the pricing front, the OPEC+ strategy succeeded in supporting oil prices for four consecutive years, yet keeping Brent crude at around $80 a barrel in 2025 appears to be a major challenge, if not unattainable, following the decision by OPEC+ countries to raise production. Forecasts point to a potential drop toward $60 a barrel or even lower, especially if global economic and geopolitical volatility persists, from whose negative repercussions oil prices will not be immune. Consequently, the price per barrel of oil will be pulled in three conflicting directions by three distinct factors. While a global economic slowdown reduces oil demand and pushes prices down, geopolitical tensions and trade wars drive them up, whereas higher output, as recently announced by the OPEC+ alliance and favored by the US president, pushes prices lower. It is a vicious circle in which oil and the price per barrel revolve amid a growing multiplicity and diversity of energy sources.
Ultimately, 2025 may prove to be more than a passing milestone, serving instead as a decisive turning point that will shape the future of global energy security and define the balance between economic growth on one hand and climate commitments on the other. These challenges will make it a pivotal year for a global energy sector that looks more complex than ever, as economic, geopolitical, and technological factors intertwine to chart the course of this vital industry.
On one hand, the world wavers between the imperative of securing sustainable energy supplies and preserving the stability of traditional markets; on the other, environmental challenges and pressures to transition to clean energy dictate a different trajectory that requires reassessing production and consumption strategies. This calls for more effective international coordination and strategic investments that keep pace with the transition while guaranteeing the right of all countries and societies to benefit from energy sources in all their diversity.
Translated from Arabic with AI. Read it in Arabic