The oil industry is in terminal decline.
This claim is not supported by available evidence.
Full Analysis
Detailed examination of the evidence
Context#
Climate activists and some financial analysts have declared the oil industry a "dying" sector. The data tells a completely different story.
Evidence#
Record Demand
- Global oil demand hit all-time highs in 2023-2024 (~103 million barrels/day)
- Demand has grown every year except during COVID
- Asian demand growth continues to accelerate
- Even the IEA projects demand remaining above 100 mb/d through 2030s
Growing Investment
- Global upstream investment: $500+ billion annually
- Middle East producers expanding capacity significantly
- U.S. production at record levels
- New discoveries in Guyana, Namibia, Suriname creating new oil provinces
Why "Peak Demand" Keeps Getting Delayed
- EV adoption slower than projections
- Developing world demand growth underestimated
- Petrochemicals driving structural demand growth
- Aviation and shipping have no viable alternatives at scale
The Decades Ahead
- OPEC projects demand growth through 2045
- Even aggressive climate scenarios require massive oil production for decades
- Existing fields decline 5-7% annually—requiring continuous investment just to maintain supply
- Underinvestment creates future supply crunches, not gluts
Industry Financial Health
- Major companies generating strong cash flows
- Dividends and share buybacks at record levels
- Returns on capital among highest in decades
- Investment-grade balance sheets
Analysis#
This claim is false. An industry producing record volumes, generating record cash flows, and seeing demand hit all-time highs is not in "terminal decline."
The "peak oil demand" narrative has been predicted for years and keeps being pushed back as reality diverges from activists' hopes. Oil will be essential for transportation, petrochemicals, and energy security for decades to come.
The companies in this sector are adapting their portfolios while continuing to meet the world's enormous energy needs. That's not decline—it's evolution. The premature obituaries for oil say more about wishful thinking than market fundamentals.