The International Energy Agency has dramatically reversed its stance on peak oil demand, reinstating a scenario where global consumption continues growing through 2050—a stunning pivot driven primarily by slower-than-expected electric vehicle adoption worldwide.

En Paris-based IEA released its World Energy Outlook 2025 on Wednesday, reintroducing a “Current Policies Scenario” that forecasts oil demand climbing 13% to 113 million barrels per day by mid-century. This marks a sharp departure from last year’s report, which projected oil demand would plateau or decline this decade across all scenarios examined.

Slower EV Adoption Reshapes Energy Forecasts

The agency explicitly tied the bearish climate outlook to stumbling electric vehicle growth. “One major determinant of future oil demand is electrification of the transport sector,” IEA Executive Director Fatih Birol said during a press briefing, according to Bloomberg. “It will depend on government policies.”

Under the Current Policies Scenario (CPS), global EV sales broadly plateau after 2035, failing to achieve the penetration rates needed to significantly displace petroleum consumption. In the agency’s alternative “Stated Policies Scenario” (STEPS), which incorporates proposed but not yet adopted regulations, oil demand still peaks around 2030 before declining—but even that projection was pushed later compared to last year’s analysis.

The CPS framework, last deployed in 2019 before being discontinued in favor of more climate-ambitious scenarios, assumes governments maintain existing policies without strengthening emission standards or EV incentives. Its resurrection comes amid mounting pressure from the Trump administration, which has criticized the IEA’s previous projections as discouraging fossil fuel investment.

Political Pressure And Market Reality Collide

Birol defended the analytical shift, stating “the main reason we have two new scenarios is the growing uncertainties in the political, economy and energy context.” He pushed back on suggestions that U.S. political pressure drove the change, though multiple reports indicate the Trump administration has led a sustained campaign questioning the agency’s climate-focused forecasts.

The United States contributes 14% of the IEA’s budget and has vocal Republican critics who argue peak oil predictions have discouraged needed energy investments. Trump Energy Secretary Chris Wright previously called IEA demand peak projections “nonsensical,” according to Reuters.

The timing carries additional weight as nearly 200 countries gather in Belém, Brazil for COP30 climate talks, where delegates pledged in Paris to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit). The IEA report shows the world exceeding that threshold in all scenarios, including those with aggressive emissions reductions—only declining below 1.5°C if massive carbon removal technology gets deployed at scale.

Oil Industry Welcomes Demand Growth Forecast

The forecast aligned more closely with projections from OPEC, the oil producer cartel led by Saudi Arabia that has repeatedly clashed with the IEA over peak demand timing. “We hope… we have passed the peak in the misguided notion of ‘peak oil,'” OPEC stated on its website Wednesday, welcoming the IEA’s reassessment.

Even in the less bullish STEPS scenario, the IEA now sees oil demand peaking “around 2030” rather than definitively before decade’s end. Daily consumption would average 96.9 million barrels in 2050—up from the previous estimate of 93.1 million barrels.

The divergent scenarios carry vastly different implications for oil markets and prices. Under CPS, higher demand would absorb excess supply capacity more quickly, potentially supporting oil prices around $90 per barrel by 2035. Meeting that demand would require roughly 25 million barrels per day of new production capacity and continued investment from producers currently facing sanctions, according to the IEA analysis.

Climate Goals Slip Further From Reach

Beyond oil, the report documented surging investment in liquefied natural gas infrastructure, with operations for about 300 billion cubic meters of new annual LNG export capacity starting by 2030—a 50% increase in available supply. Based on current policies, the global LNG market would expand from around 560 billion cubic meters in 2024 to 1,020 billion cubic meters by 2050, driven partly by rising data center and AI electricity demand.

The demand projections paint a grim climate picture. Global temperatures would rise nearly 3 degrees Celsius (5.4 degrees Fahrenheit) above pre-industrial levels by century’s end under CPS, compared with 2.5°C in the alternative pathway. Both outcomes spell catastrophic climate impacts that scientists consider extremely destructive.

“Global energy security faces an unprecedented range of threats in a way that we have never seen before,” Birol warned, citing risks spanning oil sanctions, Russian natural gas supply uncertainty, and cyber-attacks on electricity infrastructure.

EVXL’s Take

This IEA reversal isn’t surprising—it’s inevitable when governments treat EV incentives like light switches instead of long-term industrial policy. We’ve been documenting this exact policy whiplash for months, and now the world’s premier energy agency is confirming our analysis in stark terms.

Remember when Trump’s “Big Beautiful Bill” eliminated the $7,500 EV tax credit effective September 30, 2025? We warned about the demand cliff that would follow. Then in October, we reported that U.S. vehicle sales cratered as EV demand collapsed 24% in a single month—from 98,289 units in September to just 74,897 in October. That’s not a market correction; that’s policy-induced destruction of consumer confidence.

The IEA is essentially admitting that removing both the “carrot” (purchase incentives) and the “stick” (emissions penalties) means EVs won’t displace petroleum fast enough to meet climate commitments. When Honda scrapped its large electric SUV plans in July and slashed EV investment by 30%, citing “slumping U.S. EV demand,” they were reading the same policy tea leaves as the IEA.

Here’s what’s particularly galling: China is still pushing forward with aggressive EV adoption—electric trucks are booming there and slashing diesel demand—while Western policy chaos hands them the entire EV manufacturing future on a silver platter. Chinese automakers achieved near price-parity with gas cars while American and European makers retreat from EV commitments amid subsidy uncertainty.

The IEA discontinued its Current Policies Scenario in 2020 because they deemed it too pessimistic to be realistic. Five years later, policy regression has made that “unrealistic” scenario the new baseline forecast. That’s not climate modeling—that’s climate capitulation.

COP30 delegates gathering in Brazil this week must grapple with a sobering reality: their own energy watchdog now projects oil demand growth through 2050 based on policies currently in place. The pathway to 1.5°C warming isn’t just difficult anymore—according to these projections, it’s slipping out of reach entirely without dramatic policy reversals.

For EV enthusiasts and industry observers, this report validates concerns we’ve been raising about subsidy-dependent adoption models. When Senate Republicans moved to end the tax credit back in June 2025, we predicted exactly this outcome. Automakers can’t plan multi-billion dollar production lines around incentives that disappear overnight based on election results.

The question facing policymakers is whether they’ll treat EVs as a strategic industrial priority requiring sustained, predictable support—or continue the boom-bust cycle of incentives that the IEA now recognizes is insufficient to drive the transportation transition climate goals demand.

What do you think? Share your thoughts in the comments below.