Finance · Euroglobal New
Conflict, migration and economic upheaval will accompany the global move away from oil unless governments act urgently to help the worst-afflicted countries cope. Nigeria, Iran, Angola, and Algeria are among the countries that will be severely affected, as they rely strongly on oil revenues for their government and provision of public services, but have little diversification and too little capital to cushion the blow. Oil use is already waning in many countries due to the growth of renewable energy, and the Iran war has constrained supply, sending prices soaring and triggering high inflation and political instability.
Global demand for oil is forecast to plateau in the coming decade, with a peak likely in the early 2030s, forcing producers to chase a shrinking pool of buyers. Many will try to hang on to their resource revenues as long as possible, according to research from the E3G thinktank. The cheapest producers with abundant resources, such as Saudi Arabia and the United Arab Emirates, are likely to win against those with less advanced infrastructure.
Venezuela’s collapse, exacerbated by earthquakes and US influence, serves as a warning. "Governments are not thinking about and not prepared for these outcomes," said Beth Walker, co-author of the report. "The transition becomes riskier for everyone when oil producers are left to adjust on their own." Delaying the transition risks destabilization, as the climate crisis worsens.
"None of this is an argument for slowing the transition," said Maria Pastukhova. "A slow but chaotic transition can be just as destabilizing as a fast one." E3G’s report, compiled over two years with input from over 100 experts, highlights national fiscal crises that could escalate into security issues: unrest in Algeria, a more fragile Iraq, weakened state capacity in Nigeria, and heightened risks in Libya and Europe. Remedies require collaboration among the International Monetary Fund, World Bank, private sector, and governments.
Demand powers must coordinate their future demand policies to avoid geopolitical fallout. China’s declining oil demand, driven by electric vehicles, contrasts with India’s uncertain trajectory, which could influence global oil demand trends.
Source: The Guardian
