The International Energy Agency (IEA) forecasts a 6% decline in global oil investments for 2025 — the first notable contraction in over a decade outside the Covid-19 pandemic period. This anticipated reduction reflects economic uncertainties, weaker demand outlooks, and falling crude prices, IEA Executive Director Fatih Birol explained in an interview accompanying the agency’s annual World Energy Investment report.
Highlights:
Global oil investments expected to decline by 6% in 2025.
This marks the first major drop since the Covid slump in 2020.
Economic uncertainty and lower demand cited as primary drivers.
US Tight Oil Spending Slashes Overall Investment
The report attributes much of the decline to a “sharp drop” in spending on US tight oil production. While earlier projections had oil and gas investment remaining flat based on company announcements, deteriorating oil prices and mounting economic risks have dampened sentiment, driving the downward revision.
Highlights:
US tight oil sector sees steep spending cuts.
Initial flat spending estimates revised downward due to price pressure.
Investment cuts weigh heavily on global upstream expenditure.
Upstream Spending and Refinery Investment Both Fall
Total upstream oil and gas investments for 2025 are expected to hover just below $570 billion, a 4% decline from previous levels. Approximately 40% of this spending will focus on maintaining output by slowing declines at existing fields. Meanwhile, refinery investment is projected to drop to about $30 billion, the lowest level in a decade, signaling reduced capital allocation toward downstream infrastructure.
Highlights:
Upstream spending to decline roughly 4%, to under $570 billion.
40% of upstream budget aimed at production maintenance.
Refinery investment to fall to lowest in 10 years (~$30 billion).
Natural Gas and LNG Investments Show Strength
Contrasting with oil, spending on natural gas fields is expected to remain steady compared to 2024. Investment in liquefied natural gas (LNG) projects is on a robust growth path, driven by new developments in the US, Qatar, Canada, and other key regions. The report anticipates the LNG market to experience its largest capacity expansion ever between 2026 and 2028.
Highlights:
Natural gas field spending steady year-on-year.
LNG investment surges, driven by major projects globally.
LNG market poised for record capacity growth in 2026-2028.
Market Dynamics: Tariffs and OPEC+ Production Impact
Crude prices have been pressured downward amid concerns over the global economic slowdown linked to US tariff policies and the aggressive production increases by OPEC+. This oversupply environment further complicates investment decisions, exacerbating the decline in oil capital expenditures worldwide.
Highlights:
US tariffs contribute to slowing global economic growth and demand.
OPEC+ production ramp-up increases market supply.
Lower prices and oversupply tighten investment outlook.
