S&P Global Commodity Insights Releases 2025 Energy Outlook: AI's Impact and Geopolitical Uncertainties

Unprecedented Uncertainty in Energy Markets

As 2025 approaches, S&P Global Commodity Insights has released its energy outlook, highlighting an unprecedented level of uncertainty in energy markets. Analysts point to ongoing conflicts in Ukraine and Gaza, intensifying geopolitical rivalries, and significant political shifts as key factors contributing to this uncertainty 1

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AI's Growing Impact on Power Demand

A notable trend identified in the outlook is the rapid growth of artificial intelligence and its accelerating effect on power demand for data centers. Dave Ernsberger, Co-President of S&P Global Commodity Insights, states, "There are emerging technological and fundamental trends that will clearly have an impact on markets over the coming year, although how significant their impact will be is uncertain" 1

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. This surge in electricity demand has rekindled interest in nuclear power, though the prospects of a nuclear renaissance remain uncertain despite backing from major technology firms 2

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Geopolitical Factors and Energy Markets

The outlook emphasizes the growing polarization between China and the West, with China leveraging its leading position in clean technology for greater global influence. Meanwhile, the US and Europe are enhancing tariffs to protect domestic industries 1

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. The recent election of Donald Trump to the US presidency adds another layer of uncertainty, potentially affecting US participation in global climate agreements and altering foreign policy and energy objectives 2

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Fossil Fuel Market Dynamics

Mark Eramo, Co-President of S&P Global Commodity Insights, notes that "Fossil fuel prices in 2025 will be shaped by how markets adjust to growing supply and generally soft demand growth" 2

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. The outlook discusses OPEC+'s ambitions to increase supply, though uncertainties remain about their ability to do so without pushing crude prices below $70 per barrel. Additionally, a new wave of North American liquefied natural gas (LNG) supply is expected to impact global LNG prices and boost US gas prices 1

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Energy Transition Challenges

The outlook highlights a significant challenge in the energy transition: developing sufficient clean energy supply to meet growing demand while displacing existing fossil fuel usage. S&P Global Commodity Insights projects that primary energy demand will increase by approximately eight million barrels of oil equivalent per day in 2025, outpacing the growth of clean energy supply 2

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Policy Implications of US Political Shift

With Donald Trump's election, the outlook anticipates significant changes in US energy and climate policy. These may include withdrawing from the Paris Agreement, rescinding vehicle emission regulations, weakening methane regulations, and reducing support for electric vehicle adoption. The administration is also expected to grant export approvals to pending LNG export projects, potentially supporting final investment decisions in the latter half of 2025 2

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Global Energy Demand and Emissions

The outlook predicts that total energy demand growth will surpass clean energy supply growth in 2025, likely resulting in increased carbon emissions. This trend underscores the ongoing challenges in achieving global decarbonization goals and highlights the complex interplay between energy demand, technological advancements, and environmental objectives 2

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