Terra Firma Energy – 12 September 2025

The International Energy Agency (IEA), long known for predicting that global oil demand would peak before 2030, is preparing to walk back those forecasts. A draft of the agency’s upcoming World Energy Outlook report suggests both oil and gas demand are likely to keep growing for decades.

Bloomberg’s Javier Blas, who reviewed the draft, noted that the IEA’s past scenarios have leaned heavily on assumptions about climate policies being implemented in full — even when many were still only proposals. Until 2020, the agency used a “Current Policies Scenario” to reflect what governments were actually enacting. That was replaced with the “Stated Policies Scenario” (STEPS), which assumes future measures will be introduced and is often treated as the IEA’s default outlook.

The agency also created an “Announced Pledges Scenario,” which went further by assuming that every climate target and political pledge would be met on time. Critics argue this approach overstated the pace of the transition, undercounted fossil fuel demand, and repeatedly forced the IEA into revisions.

One high-profile reversal came in 2021, when the IEA’s Net Zero Roadmap declared no new oil and gas exploration was needed beyond that year. Just months later, however, the agency called for more drilling as supply shortages pushed up prices.

If the new draft is finalized, it will mark a major shift in the conversation. The assumption that trillions in oil and gas reserves would become “stranded assets” due to falling demand may need to be reconsidered — with long-term consumption now looking stronger than previously thought.