Global energy markets are currently experiencing a noticeable return to fossil fuels, a trend that significantly jeopardises ambitious climate targets. Despite international declarations made at COP30 and subsequent conferences, the world seems to be increasing its reliance on oil and gas. This prioritisation of energy pragmatism and economic realities is overshadowing a swift and uncompromising transition towards renewable energy sources. This pronounced shift is most evident in the expanding liquid natural gas (LNG) sector and adjustments in oil production strategies.
The year 2025 has witnessed a substantial increase in approvals for new LNG projects, with an estimated 300 billion cubic meters of additional annual export capacity expected by 2030. This has triggered a veritable "mad rush" by US project developers to capitalise on perceived demand, a move carrying considerable financial risks. Analysts are cautioning that the medium-term demand outlook for LNG remains uncertain, potentially leading to a future supply overhang and reduced profitability for these ventures.
The repercussions of this abundant LNG supply are already keenly felt across Europe. Wholesale gas prices recently dropped below the $10 per million British thermal units (mmBTU) threshold for the first time since mid-2024. Projections suggest a further decline to $8 per mmBTU next year. This price compression, while advantageous for consumers and industry, complicates the European Union's strategic objective to eliminate all reliance on Russian natural gas by the end of 2027. The potential for Russian gas to re-enter the market, depending on prevailing LNG price dynamics, remains a persistent uncertainty.
Beyond LNG, established oil-producing nations are also demonstrating a commitment to sustained production levels. Saudi Arabia has commenced operations at its Jafurah gas field, aiming for an impressive output of 2 billion cubic feet per day by 2030. Concurrently, the OPEC+ cartel has decided to maintain its current oil production levels, signalling a unified approach to influence market stability. Forecasts indicate that global oil consumption will persist above 100 million barrels per day well into the 2050s, a clear indication of enduring demand for hydrocarbons.
The International Energy Agency's (IEA) previously dominant prediction of an impending "historic oil glut" appears to be losing credibility. This is particularly true as revised forecasts suggest a downward adjustment in US production capabilities. Nevertheless, US shale producers remain undeterred, leveraging technological advancements in drilling to enhance operational efficiency and sustain robust output.
Geopolitical tensions are also subtly influencing oil market dynamics. The United States has intensified its oil blockade against the Venezuelan government, reportedly pursuing oil tankers near its shores. This heightened scrutiny, combined with potential interest rate cuts from the US Federal Reserve which could boost commodity prices denominated in dollars, contributes to supply uncertainty surrounding benchmarks like West Texas Intermediate (WTI). WTI has recently traded around the $57.65 mark, a figure reflecting these multifaceted influences.
The primary justification behind this fossil fuel resurgence seems to be a global adoption of "energy pragmatism." Governments, contending with high electricity costs that hinder industrial competitiveness and climate policy aspirations, are increasingly prioritising economic realism. Countries like Canada, for instance, are reportedly scaling back climate regulations to stimulate investment in energy production. The challenging economics of intermittent renewable sources when expected to provide baseload power, alongside the political necessity of ensuring energy security and affordability, are collectively driving this recalibration away from a purely emissions-reduction-focused strategy. The cumulative impact is a discernible dimming of prospects for achieving net-zero emissions by 2050, as the world navigates a complex energy landscape where immediate needs often supersede long-term environmental objectives.