Wood Mackenzie's 10 predictions for energy and natural resources in 2025

In 2025, many of the key trends that have shaped the energy and natural resources industries in 2024 will continue. But we are also likely to see changes that have been bubbling away below the surface start to play a more prominent role. Here are some of Wood Mackenzie’s predictions for the year ahead.

1. Structural changes in China will have a significant impact on global oil demand…

We expect global demand for diesel fuel to increase next year, supported by accelerating growth in industrial production, but it is likely to remain still below pre-Covid levels. Wood Mackenzie is forecasting that world industrial production will be 13% higher in 2025 than in 2019, but diesel demand will be about 0.6% lower.

One of the key countries behind that shift is China. We expect that China’s oil demand will continue to rise in 2025, but almost all of the growth will be accounted for by petrochemical feedstocks. Demand for transport fuels is likely to decline. Continued growth in consumption of jet fuel will be more than offset by declines in demand for gasoline and diesel for road transport. Electric vehicles and LNG-fuelled trucks are now having a significant impact on the Chinese market.

2. …and volatility in world oil markets will increase

Political events could have a big impact on world oil markets in 2025. On the demand side, our base case projects an increase in global oil consumption of about 1.4 million barrels per day next year. But this could be cut by a third if President-elect Donald Trump follows through on his plans for steep increases in tariffs immediately when he takes office, and other countries reciprocate. Universal higher tariffs would mean slower global growth and could push up the price of oil products for consumers.

3. Saudi Arabia will become one of the world’s 10 largest markets for battery storage

Emerging markets for storage will be on the rise in 2025, and Saudi Arabia will be in the forefront. Wood Mackenzie’s new forecasts for battery storage capacity to be installed over the next decade will show Saudi Arabia leaping up the rankings to become one of the world’s 10 largest markets.

The spectacular growth in the kingdom’s storage market is driven by its ambitious Vision 2030 goals for economic development and massive renewable energy investments. Battery storage will be an essential complement to Saudi Arabia’s build-out of solar and wind generation.

4. Global solar installations will level off for the first time since 2018

Annual installations of new solar capacity worldwide have soared over the past five years, but we expect that growth to come to an end in 2025. We project that global solar installations will fall slightly next year to 492 gigawatts, a 0.4% decline from this year. Over 2019 to 2024, the average annual growth rate for yearly global solar installations was 31%. But power market constraints in some key countries are becoming increasingly significant obstacles to investment.

5. Corporate confidence will drive transformational deals in copper

The Major mining companies have ambitions for copper to be the driver of growth for their businesses. Consensus has grown around the central importance of the red metal in the largest companies' portfolios. And while battery raw materials markets are expected to remain in a glut in 2025, copper prices will remain supported by strong demand growth and project delays.

6. Final investment decisions for new US LNG projects will come more slowly than the Trump administration might hope

President-elect Donald Trump has pledged that on his first day in office he will end the Biden administration’s pause on new approvals for LNG exports to countries that do not have a free trade agreement (FTA) with the US. Some in the industry expect a new wave of US LNG investments in 2025 as a result, but we take a more cautious approach. Securing non-FTA approvals will be welcome progress for many projects, but might not be their last obstacle to clear before taking FID.

7. National oil companies will be stepping up, and out

International oil companies (IOCs) face a difficult capital allocation balancing act in 2025. Corporate discipline will generally translate into flat capital spending budgets, as investors continue to reward cash distributions through dividends and buybacks. 

An elite group of national oil companies (NOCs) will drive growth across the sector. Expect them to be active buyers in upstream, across the international gas value chain and remain strategic investors in downstream. While Middle Eastern NOCs carry the biggest chequebooks, Asian NOCs could also play a bigger role internationally again. 

8. E&Ps will need to show big synergy gains to win investors’ support for M&A

Updated estimates of integration synergies from M&A deals have been big news recently in US oil and gas. Expand Energy – created from the merger of Chesapeake and Southwestern – increased its target for synergy gains from the deal by 25% after it closed in October. ConocoPhillips’ latest number for the synergy gains from its acquisition of Marathon Oil is double the initial estimate. And ExxonMobil just increased its number for the gains from integrating Pioneer Natural Resources by 50%, to US$3 billion per year.

These consistently strong numbers set a high bar for future consolidation moves in the US. We don’t think 2025 will see the same level of M&A spend as 2023 and 2024.

9. US blue hydrogen will dominate global supply additions, as green faces setbacks

In 2025, blue hydrogen, made from natural gas with carbon emissions captured, will solidify its position as the dominant force in the US low-carbon hydrogen industry. Projects with capacity totalling more than 1.5 million tons per year are set to reach FID, cementing the position of the US as the world's leading producer of blue hydrogen. The continued investment will be driven by bipartisan support for the 45Q tax credit for carbon capture and backing from the oil and gas sector

Meanwhile, green hydrogen, made by electrolysing water using renewable energy, will struggle. The incoming Trump administration’s lukewarm stance on decarbonisation, coupled with regulatory uncertainty and competition for capital from lower-risk sectors, will stifle development.

10. Carbon offset markets are set to flourish with more safeguards

The agreement at COP29 on rules for global carbon markets could be a catalytic moment for offsets. The world has made important progress on implementing Article 6 of the Paris Agreement, paving the way for governments to use carbon credits to help meet their national emissions goals.

We expect that in 2025, governments, UN agencies and independent initiatives will accelerate their efforts to strengthen market integrity and establish new guidelines. If robust methodology and oversight can be established, UN-backed carbon trading under Article 6 will raise the credibility of the market and boost corporate demand as well.