In a stark admission that underscores the fragility of global energy supply, the International Energy Agency (IEA) has revealed that decline rates in mature oil and gas fields are accelerating, putting unprecedented pressure on the industry to ramp up investments just to keep production steady.
This report comes amid growing scrutiny of the IEA’s forecasting credibility, particularly following U.S. Energy Secretary Chris Wright’s recent threat to withdraw American funding from the agency unless it refocuses on realistic energy security rather than aggressive green agendas.
The IEA’s analysis, detailed in its latest insights on upstream dynamics, paints a picture of an industry where natural depletion is outpacing new discoveries and developments. After fields reach their peak, conventional oil output declines by an average of 5.6% annually, while conventional natural gas falls by 6.8%.
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Without sustained capital inflows, the world could lose the equivalent of Brazil and Norway’s combined oil production—about 5.5 million barrels per day (bpd)—every single year, a sharp increase from the 4 million bpd lost annually back in 2010. For natural gas, the shortfall would hit 270 billion cubic meters per year, up from 180 billion in the same period. IEA Executive Director Fatih Birol didn’t mince words: “Decline rates are the elephant in the room for any discussion of investment needs in oil and gas, and our new analysis shows that they have accelerated in recent years.”
Energy Secretary Chris Wright Says Withdrawal from IEA Is Now on the Table
He added that nearly 90% of annual upstream oil and gas investments are funneled into merely offsetting these losses at existing fields, leaving precious little for expanding supply to meet rising global demand.
U.S. Pressure Forces IEA Reckoning?
The timing of this report raises eyebrows, especially in light of Secretary Wright’s pointed criticisms. In a recent statement, Wright, a vocal proponent of American energy dominance and a former fracking executive, warned that the U.S. could pull out of the IEA—established in 1974 to safeguard oil supplies during crises—if the Paris-based agency doesn’t abandon its “biased” pivot toward net-zero evangelism.
The U.S. currently foots about 18% of the IEA’s $5.8 million annual budget, making Wright’s threat a potential gut punch to the organization’s operations. Wright has lambasted the IEA for morphing from a neutral forecaster into a cheerleader for renewables and rapid decarbonization, contrasting its pessimistic oil demand projections with OPEC’s more bullish outlook. This comes as the Trump administration doubles down on fossil fuels, viewing the IEA’s 2021 report—which advised against new oil, gas, and coal projects to hit climate targets—as a direct assault on investment.
OPEC has echoed these sentiments, accusing the IEA of creating market uncertainty that discourages the very investments now deemed essential.
Whether Wright’s saber-rattling prompted this “awakening” to decline rates is speculative, but it highlights a broader geopolitical rift: Western policymakers pushing net-zero fantasies while the realities of supply constraints loom large.
Trillions Needed to Stem the Tide
The IEA’s math is sobering. To merely maintain flat global oil and gas output amid these escalating declines—and before accounting for any demand growth—the world would need trillions of dollars in upstream investments over the coming decade.
That’s not hyperbole; it’s the cost of drilling deeper into challenging shale plays and offshore frontiers to replace what’s inevitably lost. A halt in new spending today would cascade into massive supply shortfalls by the late 2020s, potentially spiking prices and disrupting economies worldwide.
This revelation flips the script on years of IEA narratives downplaying fossil fuel futures. As Birol noted, “Only a small portion of upstream oil and gas investment is used to meet increases in demand while nearly 90%… is dedicated to offsetting losses.”
In essence, the energy transition isn’t just about adding renewables; it’s about propping up the hydrocarbons that still power 80% of the global economy.
Asia’s Appetite vs. the West’s Retreat
Enter the demand side, where the story gets even more intriguing. While Europe and the UK grapple with self-inflicted wounds from net-zero policies, Asia—led by India and China—continues to drive oil consumption higher, potentially overwhelming any Western pullback. The IEA’s September 2025 Oil Market Report projects global oil demand growth at a steady 700,000 bpd for both 2025 and 2026, with non-OECD nations like India and China accounting for the lion’s share.
India is poised to lead the charge, with demand surging by a steep 1 million bpd through 2030, fueled by urbanization, rising incomes, and a booming transportation sector.
China, despite signs of a slowdown—imports dipped in early 2025—still expects modest growth, with total demand stabilizing around 15-16 million bpd as electric vehicles nibble at the edges but industrial and petrochemical needs persist.
Contrast this with the deindustrialization gripping the UK and EU. Net-zero mandates have jacked up energy costs, making industrial electricity in the UK pricier than in the U.S. or much of Europe, hammering manufacturing and heavy industry.
Critics argue these policies are accelerating a hollowing out of the economy, with poorer, industrial regions hit hardest.
In the EU, “net-zero pledges” are easier to meet in theory but tougher in practice, driving companies to relocate to lower-cost, less-regulated markets like the U.S.
Even UK Tory leader Kemi Badenoch has pledged to ditch net zero and maximize North Sea oil and gas to revive the sector.
Will Asia’s robust demand outpace the West’s decline? Absolutely, in the near term. India’s explosive growth alone could more than offset any EU/UK industrial contraction, while China’s sheer scale ensures baseline demand remains elevated. The IEA’s forecasts show non-OECD demand adding over 1 million bpd net by 2030, dwarfing OECD stagnation or shrinkage.
Deindustrialization in Europe isn’t just a policy choice; it’s a demand suppressant that hands the growth baton to Asia.
Bullish Signals for Oil Investors
For oil investors, this dynamic screams opportunity. With declines accelerating and Asian demand unyielding, the market looks primed for tightness that could anchor prices in the $65-$75 per barrel sweet spot for Brent crude through 2025 and beyond. Analysts at Goldman Sachs recently hiked their second-half 2025 Brent forecast to $66/bbl, citing resilient demand from India and supply discipline from OPEC+.
J.P. Morgan sees global demand expanding by 800,000 bpd next year, down slightly but still supportive amid potential supply gluts from non-OPEC producers.
Bullish factors include India’s rising imports and China’s petrochemical boom, which could counterbalance Western policy-induced weakness.
Of course, risks abound—OPEC+ hikes, U.S. shale surges, or a deeper Chinese slowdown could cap upside. But with the IEA finally acknowledging the decline elephant, and U.S. pressure ensuring more grounded forecasts, the $65-$75 range feels like a resilient floor. For investors betting on real-world energy needs over ideological dreams, oil remains a compelling play.
Energy News Beat is committed to delivering unfiltered insights on the global energy transition—or lack thereof. Follow us for more on how policy meets reality. As for me and my house, we will be investing in U.S.-produced energy.
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