Global oil supply may fall short of rising demand, according to a recent estimate from the intelligence firm Rystad Energy. The firm projects that if demand grows as expected by the Organization of the Petroleum Exporting Countries (OPEC), the current rate of global oil supply could become inadequate. Recoverable oil resources are currently estimated at around 1.5 trillion barrels, but Rystad Energy has made a significant revision, lowering its estimate for yet-to-find resources by approximately 456 billion barrels.
This adjustment reflects a troubling trend in the industry. Frontier exploration has greatly diminished in recent years, while costs associated with offshore drilling and development have surged, doubling since the start of the decade. Outside the United States, few shale successes have emerged, with Argentina’s Vaca Muerta play being a notable exception. According to Rystad Energy, new conventional oil projects are expected to replace less than 30% of production over the next five years, with exploration efforts likely to replace only 10% of reserves.
Oil-producing nations, notably the world’s leading exporter Saudi Arabia and its state-owned oil company Saudi Aramco, have long cautioned that reduced investment in exploration, along with calls to limit fossil fuel extraction, could jeopardize future supplies and destabilize the market. The industry asserts that new exploration and projects will be crucial to counteract declines in production from aging fields. If OPEC’s optimistic demand projections prove accurate, a supply crunch could loom ahead.
Artem Abramov, Deputy Head of Analysis at Rystad Energy, emphasized the need for a substantial increase in exploration and drilling success to avert a crisis. “In a world with flat or growing demand after 2030, another oil super-cycle would be needed,” he stated. This scenario assumes ongoing growth in oil demand, a perspective shared by OPEC and Saudi Aramco.
While some analysts predict that oil demand could peak in the early 2030s, they do not foresee a dramatic decline. Instead, they anticipate a plateau in consumption. Conversely, the energy transition away from fossil fuels has faced significant hurdles, including high costs and supply chain disruptions. Government support and subsidies have also not been sufficient to accelerate the transition, which has become evident in rising consumer energy bills.
Amin Nasser, President and CEO of Saudi Aramco, remarked at the Energy Asia 2025 event in June that the transition has been oversold. “We were told it would be rapid, painless, and inevitably mean the collapse of conventional energy. Yet oil demand still exceeds 100 million barrels per day, with no sign of collapsing,” he noted. OPEC Secretary General Haitham Al Ghais echoed this sentiment in the foreword of OPEC’s latest World Oil Outlook, which anticipates a 19% increase in global oil demand by 2050, reaching 123 million barrels per day.
In light of these developments, many major international oil companies are adjusting their strategies. Firms such as BP and Shell have reduced investments in renewable energy and are once again focusing on oil and gas. They are seeking to enhance their portfolios in these sectors to prepare for anticipated demand increases.
Research from Rystad Energy suggests that if global oil demand rises as forecasted, supply may struggle to keep pace, even with high prices for producers. Years of underinvestment in exploration could lead to a supply crunch as demand either rises or plateaus in the coming decades. The response from both Big Oil and national oil companies indicates a significant shift in strategy, emphasizing the ongoing importance of fossil fuels in the global energy landscape.
