The consumption of crude oil for power generation in the Middle East is decreasing, as highlighted in a recent report by the International Energy Agency (IEA). This shift is occurring even as the demand for electricity in the region continues to surge. The IEA documented that electricity demand across the Middle East and North Africa has tripled from the year 2000 to 2024, driven by population growth and rising incomes that enhance living standards and increase electricity usage.
Currently, the region relies heavily on natural gas and crude oil for energy, with both fuels accounting for approximately 90% of power generation. However, the IEA forecasts a significant transition towards natural gas, which is expected to provide half of the growth in power generation by 2035. Over the same period, electricity demand is projected to rise by as much as 40%, necessitating substantial increases in power capacity.
Changing Energy Landscape
Despite the current reliance on oil, its role in power generation is set to decline markedly. Presently, oil contributes to about 20% of the energy mix for power generation, but this figure could drop to as low as 5% by 2035. This shift will result in a larger volume of crude oil available for export, potentially reshaping the global oil market.
Fatih Birol, the IEA’s Executive Director, emphasized the urgency of this transition in a recent news release. He noted, “Demand for electricity is surging across the Middle East and North Africa, driven by the rapidly rising need for air conditioning and water desalination in a heat- and water-stressed region with growing populations and economies.” Birol also pointed out that the region has experienced the third largest electricity consumption growth globally since the start of the century, trailing only China and India.
In response to this rising demand, the IEA anticipates that power capacity will need to expand by over 300 gigawatts in the next decade. This increase is equivalent to three times the current total generation capacity of Saudi Arabia. As the region adapts its energy strategies, the shift away from oil could have significant implications for energy markets and environmental sustainability.
The transition highlights the intricate balance that Middle Eastern nations must achieve between meeting rising energy demands and reducing reliance on finite resources. As countries in the region look to natural gas as a more sustainable alternative, this strategic pivot could redefine not only their energy policies but also their economic futures.
