Talk of fossil fuel decline has not matched reality, especially as the world navigates rising geopolitical tensions and shifting alliances. Russia’s assault on Ukraine has sent shockwaves through energy markets, thrusting oil to the center of global economic and security debates. As Carolyn Kissane of New York University put it, this crisis “upended the geopolitics of oil,” spurring governments to rethink their energy security, and the industry has seen milestone developments such as the third phase of Johan Sverdrup field development.
What has surprised many analysts is the continued increase in demand. Rather than tapering off, global consumption has edged higher, with Asia—especially a newly reopened China—powering much of that demand. Kissane noted that, “every day, the world consumes over 100 million barrels,” and the expectation is for this number to keep climbing, at least for now.
Recent moves by OPEC+ have only heightened uncertainty. When the organization announced deeper production cuts, oil prices jumped, sending markets scrambling for answers. The decision caught many by surprise, reflecting domestic concerns in places like Saudi Arabia, which steers the group. The cuts might help bolster their own budgets but could lead to higher costs for consumers in the United States and beyond.
Geopolitical Fault Lines Redrawn
The war in Ukraine has forced policymakers to confront uncomfortable truths. Even though Europe has ramped up investments in renewables as part of its Green Deal, quick fixes are limited. Russia remains a dominant force, still managing to export oil in significant quantities, though now at discounts eagerly snapped up by buyers such as India and China. Trade routes have been redrawn, with much of the Russian supply moving east, and creative “shadow tanker” operations bypassing Western sanctions.
India’s approach has been all about pragmatism. “If you have very high energy inflation and high oil prices, that’s going to have ripple effects across the Indian economy,” Kissane observed. Taking advantage of discounted Russian crude, India has built up its refining capabilities, using those imports both domestically and for re-export to other markets, including places as far away as Africa.
The relationship between the United States and Saudi Arabia, once firmly anchored in security and oil, now looks more delicate than ever. Kissane pointed out, “U.S.-Saudi relations have been very tense for the last ten years… we’re seeing a very different Saudi Arabia today.” Riyadh’s decision to cut production has signaled its willingness to chart its own course, regardless of Washington’s concerns.
Energy transitions are rarely even. While Western countries talk up decarbonization, much of the demand growth is centered in regions with rising populations and rapid development, such as Africa and Asia. Calls from Western banks to halt investment in fossil fuels are met with resistance from countries still striving for reliable energy access, much as in other industries where rising energy demand and supply constraints are becoming widespread concerns.
Infrastructure and politics are inseparable. Projects like Nigeria’s pipeline plans to reach European markets face long timelines and unpredictable risks. Without concrete investments and stable partnerships, many such ventures remain just blueprints.
State-owned companies now control over three quarters of the world’s oil reserves, making state interests pivotal in every market move. Nations like Venezuela, despite sitting atop enormous reserves, face uphill battles due to aging infrastructure and political turmoil. On the other hand, technological and logistical limits prevent China from achieving the kind of shale-driven boom that revolutionized U.S. oil supply.
Meanwhile, nuclear power is making a cautious return in some regions as countries seek reliable alternatives with low emissions, but old concerns about safety and soaring costs stand in the way of broader adoption.
Conversation around oil today reflects anxiety about security, price shocks, and the uneven pace of energy transition. No one can say exactly when global oil demand will peak, but as Kissane emphasized, “we are not reducing demands, but we’re seeing tightening supply—that’s going to have very significant impacts for economies, especially those that are already fragile.” The next few years promise intense debate and persistent uncertainty as countries strive to balance immediate needs with future ambitions.
