Rystad predicts energy sector volatility in 2025. (Image source: Adobe Stock)
The coming year looks set to bring more volatility, geopolitical tension and policy evolutions in terms of the energy scene, according to new research from Rystad Energy, which has highlighted significant trends that will shape the energy world in 2025
The US-China dynamic, ongoing conflicts in the Middle East and the war in Ukraine will take centre stage, while rising instability across the Global South, and the transformative impact of AI will also shape the global order. A global trade war sparked by US tariffs, and China economic slowdown are potential clouds on the horizon.
In terms of global upstream investments, Rystad forecasts a decline of 2% in 2025, with deepwater developments in Surname, Mexico and Turkiye and offshore shelf investments in Suriname Indonesia, Qatar and Russia offset by a decline in shale/tight oil investments. Despite Donald Trump’s “drill baby drill” rhetoric, US operators are less likely than ever to spend more on drilling in the face of an oversupplied market. A forecast growth in both OPEC+ and non-OPEC+ supply is set to put a downward pressure on oil prices.
“Leading into 2025, the OPEC+ balancing act will make or break oil prices, seeking to manage its market share expectations alongside non-OPEC+ growth and slowing demand,” said Aditya Saraswat, senior vice president, Upstream Research at Rystad.
Rystad also highlights ongoing supply chain issues, with geopolitical tensions and increased protectionism likely to impact the global supply chain supporting the energy transition. Within offshore oil and gas, bottlenecks around floating production, storage and offloading vessels (FPSOs), subsea kits, drilling rigs and other vessels will continue to inflate and delay capital projects. Overall, increased divestments, mergers and acquisitions are likely across the energy supply chain.
Global power demand is entering a period of accelerated growth, fuelled by industrial decarbonisation efforts, the rise of EVs and the rapid expansion of data centres, with global electricity demand from data centres set to more than double by the end of the decade.
Low carbon energy markets are set to grow, boosted by climate plans emerging from the COP29 summit.
“However, However, 2025 could be another reality check for renewables and cleantech, with shifting policies favouring fossil fuels, green energy stocks under pressure, and uncertainty about funding and subsidies,” commented Artem Abramov, head of Clean Tech Research at Rystad Energy.
Nevertheless Solar PV is set to grow by around 600TWh in 2025, and the CCUS market is poised for rapid growth, thanks to policy support, despite infrastructure hurdles.
The hydrogen sector is however facing a reality check with challenges and cancellations on the cards.
“We expect a more pragmatic approach in the clean hydrogen sector, as the cost premium for renewable hydrogen and derivatives remains largely unchanged. Additionally, 2025 will see continued progress from China and India, as they advance their clean hydrogen and derivatives agendas,” said Minh Khoi Le, head of Hydrogen Research at Rystad.
“We’re moving from a time of energy scarcity to a time of energy abundance,” says Rystad Energy CEO and founder Jarand Rystad. “Capacity additions in both fossil fuels and renewables will outpace increases in demand next year. Similarly, in the face of an oversupplied oil market, OPEC+ may need to extend its production cuts far into 2025 to protect oil prices. The era of China driving oil consumption growth is over, with the country’s peak diesel in the rearview mirror, gasoline demand plateauing and coal consumption levelling off, as it is globally.
“This is echoed in the electricity market, with 90% of the power consumption growth in 2025 coming from renewables, while nuclear and gas share the remaining 10%. The intermittency of renewable power capacity has triggered record periods of negative prices, intensifying the need for reliable energy storage. As such, 2025 could be a breakout year for energy storage systems. Of the expected 1,350 terawatt hours (TWh) of growth in global power demand, consumption by data centres – primarily fuelled by AI – is likely to grow by 13% in 2025. This equals about 3% of total electricity consumption growth, similar to the growth from the 20 million new electric vehicles (EVs) expected.
“The new Trump administration will impact domestic and global energy priorities, including pulling any levers available to increase domestic crude production, even though the industry is unlikely to respond to this stimulus.
"However, President Trump might have more success in accelerating liquefied natural gas (LNG) infrastructure investments, the results of which will not be felt for several years. These dynamics underscore the importance of careful navigation as the sector balances short-term challenges with long-term opportunities.”
