The combination of a new calendar year and the new political administration has prompted many industry players to release updated outlooks and opinions on global energy requirements. ExxonMobil just presented its Global Outlook to 2050 in a webinar developed for the Society of Petroleum Engineers,¹ Enverus just released its Minerals Outlook 2025 Whitepaper,² and Wood Mackenzie released “Five themes shaping the energy world in 2025.”³

ExxonMobil’s Global Outlook to 2050

ExxonMobil’s outlook starts out by quoting some key growth parameters looking ahead:

• In 2050, the world will be “vastly different”
• 2 billion more people on the planet than today
• The global economy will double in size from today’s levels
• 15% more energy will be needed versus today, primarily raising living standards in the developing world
• 400%+ expected increase in solar and wind-powered generation
• 54% of the world’s energy needs will still be met by oil and natural gas

As shown in the chart below, oil production is expected to remain relatively flat in the next 25 years, while coal generation is the only source expected to decline. As shown, lower-carbon energy will meet more of the world’s future needs:

The two lines above showing the largest growth are Wind/Solar, which would be expected to be correlated with the growth in electricity demand noted. While not specifically noted in the ExxonMobil presentation, the increase in expected AI computing electrical power demand is contributing to the growth in the need for additional electricity generation capacity.

Enverus Minerals’ Outlook 2025 Whitepaper

Enverus notes that, as we move into 2025, the oil and gas industry will continue the era of consolidation and focusing on returning value to shareholders versus continued growth.

AI and Data Centers: A New Energy Demand Factor

Expected AI-related electricity demand is one of the key factors noted in Enverus’ Natural Gas Price Outlook, which pointed out:

“The U.S. power grid’s base load is rapidly increasing driven by skyrocketing demand for data centers that require vast energy supplies to operate. The continued adoption of electric vehicles and build out of charging infrastructure continues to increase demand as well. To keep the lights on when the wind isn’t blowing and the sun isn’t shining, the rapid advance of renewable energy also requires secondary natural gas power generation, which has replaced coal as the preferred fuel source.”

As shown in the chart from that publication, data centers are expected to drive an additional gas production need of 4.2 billion cubic feet per day (Bcf/day) of natural gas consumption in the coming years.

However, the market challenged this assumption when DeepSeek’s new AI model,⁴ allegedly developed at a fraction of the cost of current U.S. models, caused natural gas prices to fall briefly as the markets digested this new information.

Carbon Capture and Storage (CCUS)

Over the last decades, the U.S. has made big strides toward achieving a net zero emissions profile. This includes replacing coal-fired power generation with less carbon-intensive natural gas along with a mix of solar, wind, and geothermal energy. Indeed, it is a mix of energy sources that is key to achieving net zero rather than relying on one approach or technology alone, and CCUS will play a role.

Two of the country’s largest oil-producing states are leading the charge into carbon capture and storage. Texas and North Dakota have the existing infrastructure to jump start CCUS with CO₂ pipelines used for enhanced oil recovery and depleted gas reservoirs that can be repurposed for storage. To succeed, CO₂ transportation and storage will have to scale up further along with significant investment in carbon capture technology at emissions sources, such as:

• Power generators
• Natural gas processing plants
• Industrial natural gas users

As shown in the graphic below, Enverus reports over $2 billion of CCUS projects underway.

Wood Mackenzie’s “Five Themes Shaping the Energy World in 2025”

Wood Mackenzie is a leading global provider of data and analytics solutions for the renewables, energy, and natural resources sectors, with products including data, analytics, insight, events, and consultancy.

1. Brave New World: Geopolitical shifts, particularly in the U.S. and China, are poised to significantly impact global trade, climate policies, and energy dynamics. The U.S. administration’s potential trade tariffs could hinder global economic growth, while China’s decarbonization efforts could position it as a leader in renewable energy.
2. Capital Allocation and Finance: Investment in energy and natural resources is projected to reach record levels, exceeding $1.5 trillion in 2025. While power and renewables attract substantial investment, the growth rate has slowed, indicating a cautious approach amid energy transition uncertainties.
3. Euro Majors: European oil and gas companies are focusing on portfolio optimization and cost efficiencies to enhance financial flexibility. This strategy aims to prepare them for potential transformative deals in the future as they navigate the evolving energy landscape.
4. A Volatile Year Ahead for Oil, Gas, and Metals Prices: OPEC+ faces challenges in maintaining oil prices amid resilient non-OPEC supply and fluctuating demand. Brent crude prices are expected to average between $70 to $75 per barrel in 2025, reflecting the complex dynamics of global oil markets.
5. Emerging Low-Carbon Technologies: There is a notable increase in investment toward emerging low-carbon technologies, particularly in carbon capture and storage (CCS) and hydrogen. This trend underscores the industry’s commitment to diversifying energy sources and reducing carbon emissions.

Unintended Consequences of Rising Data Center Demand

Wood Mackenzie goes on to note that “an unintended consequence of the datacentre boom over time could be higher US natural gas prices as rising demand squeezes Henry Hub, with a knock-on effect for electricity prices. President-elect Trump won’t want higher domestic gas prices pushing up US consumers’ electricity bills. Like gasoline in the run-up to the November election, electricity prices could become a political hot potato.”

Key Takeaways

Most of the outlooks published recently focus on expected demand for oil and gas production increasing, with supplies expected to match. What is not yet seen are the expected impacts of “Drill Baby Drill,” one of President Trump’s campaign slogans.

Major players in oil and gas might enjoy the benefits of additional production, but do they really desire for their actions to reduce their future earnings? President Trump has also asked OPEC to consider increasing their production to lower prices, but they have not acted on this request. Independents and new producers may certainly drill additional wells, but their impact on total U.S. production is limited their relative scale.

In a nutshell, demand for oil and gas is expected to increase, but there is still no clear path to lower commodity prices.

WTI Strip Prices Decrease in the Near Term

Spot prices and futures prices for the West Texas Intermediate (WTI) contract decreased approximately $2.50 per barrel in the near term and increased approximately $0.50 over the longer term.

WTI Strip Prices – One Month Change

As shown, the oil price curve remains in a state of “backwardation,” reflecting the market’s expectation of lower future spot prices.

Oil Price Outlook

The price distribution below shows the crude oil spot price on February 12, 2025, as well as the predicted crude oil prices based on options and futures markets. Light blue lines are within one standard deviation (σ) of the mean, and dark blue lines are within two standard deviations.

WTI Crude Oil $/BBL

Based on these current prices, the markets indicate there is a 68% chance oil prices will range from $61.50 and $82.50 per barrel in mid-May 2025. Likewise, there is roughly a 95% chance that prices will be between $47.00 and $105.00. By mid-July 2025, the one-standard deviation (1σ) price range is $58.50 to $85.00 per barrel, and the two-standard deviation (2σ) range is $41.50 to $117.00 per barrel.

Insights

Remember that option prices and models reflect expected probabilities, not certain outcomes, but that does not make them any less useful. Throughout most of 2023 and 2024, crude oil spot prices have primarily fluctuated within the range of $70 to $90 per barrel. During that time, we observed general increases in futures price volatilities as prices neared the upper bound of that range, as evidenced by the futures price ranges observed. For mid-July 2025 pricing as of February 12, 2025, the 1σ range had a spread of $26.50 per barrel, and the 2σ range had a spread of $75.50 per barrel. For comparison, in 2022 we observed 1σ and 2σ price ranges in excess of $65.00 and $150.00, respectively.

1. ExxonMobil’s Global Outlook to 2050, Tyler Godspeed, Chief Economist, ExxonMobil Corp. Watched on January 22, 2025.
2. Enverus Minerals Outlook 2025, Macro-economic review, M&A activity trends and economic analysis.
3. Simon Flowers, Gavin Thompson, et al., “Five themes shaping the energy world in 2025,” Wood Mackenzie, January 8, 2025.
4. Yasir Atalan, “DeepSeek’s Latest Breakthrough Is Redefining AI Race,” Center for Strategic & International Studies," February 3, 2025.