Gas and oil production stagnates in the shadow of Strait of Hormuz tensions

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The International Energy Agency has confirmed a structural slowdown in fossil fuels in 2025 as renewable generation hits record growth

Cristina Cándido

Monday, 20 April 2026, 14:18

The global energy system crossed its own Rubicon in 2025. For the first time in history, solar photovoltaic power moved beyond being an alternative and became the main driver of global energy growth, accounting for more than 25% of the increase in demand.

This milestone, highlighted in the 2026 trends report by the International Energy Agency (IEA), reflects the progress of the energy transition at a time of growing geopolitical tension, particularly in the Middle East - a key region for both oil and gas production.

Electricity demand, meanwhile, rose by 3%, more than double the growth in overall energy demand. This increase came largely from the rise of electric vehicles (one in four cars sold last year fell into this category) and from data centres, whose demand grew by 17%, especially in the US.

Although demand grew across all energy sources in 2025 (up 1.3% overall), fossil fuels are now showing clear signs of structural slowdown. Gas accounted for 17% of total energy supply, but its growth dropped sharply to just 1%, compared with a strong 2.8% in 2024. This slowdown reflects weaker industrial activity and very high liquefied gas prices during the first half of the year.

Oil - long the dominant energy source - also saw only modest growth of around 0.65 million barrels per day in 2025, about 0.7%, well below the average annual increase of the previous decade. This cooling trend largely reflects the electrification of transport and the growing use of electric vehicles, which are reducing fuel demand on the roads.

Looking ahead to 2026, the IEA expects oil demand to fall for the first time since the pandemic, partly due to rising prices linked to the closure of the Strait of Hormuz. It estimates a drop of around 80,000 barrels per day.

Supply security

This shift comes at a time of serious instability in the Middle East, the centre of global hydrocarbon production. While the report does not directly link demand trends to specific conflicts, it shows how factors such as price volatility, supply security and the strategic use of gas for electricity generation are reshaping the global energy map. It consolidates the idea that energy independence increasingly depends on renewables.

By contrast, solar power recorded the largest increase ever seen for a single electricity source in 2025, adding an extra 600 terawatt-hours. Together with nuclear energy, it met almost all of the new global electricity demand, reducing the relative importance of coal and gas. Nuclear power itself grew by 1.2% worldwide, reaching a record output of 2,852 terawatt-hours.

Despite this boom in clean energy, the IEA report notes that global carbon dioxide emissions from the electricity sector still rose by around 0.4%. In 2025, emissions in advanced economies increased faster than in the rest of the world for the first time.

"In advanced economies, the cold winter of 2025 drove up heating demand and increased natural gas consumption," the report says of the EU, attributing 16 billion cubic metres of gas use to weather conditions out of a total of 32 billion. By contrast, emissions fell in China due to the expansion of renewables and in India they remained stable for the first time since the 1970s.