Strategic Signals from a Fragmented Global Energy System

For this year’s review, I decided to move beyond the headlines and instead dissect the strategic themes shaping the global energy system. What began several years ago as an annual reflection on the top headlines and their implications for the energy sector has evolved into a body of work with deeper strategic analysis. This review assessed how energy players responded to technological change, geopolitics, and climate pressure. It reflects my interpretation of the strategic signals shaping energy decisions across markets, technologies, and governance systems.

Rising power demand, driven mainly by artificial intelligence and the explosive growth of data centres, has emerged as a defining force in energy markets. It challenged long-held assumptions about energy consumption, infrastructure adequacy, and the pace of the energy transition. This demand pressure prompted a reassessment of the global energy mix. Nuclear energy re-entered strategic discussions in several markets, while nuclear fusion continued its gradual shift from research toward early commercialization. At the same time, the year’s energy headlines underscored a persistent tension: efforts to drive revenue growth and maintain business sustainability often sat uneasily alongside decarbonization commitments. The result was an uneven landscape. Some governments and firms pursued diversification and new investment pathways; others narrowed their focus and returned to core assets. As priorities were recalibrated, 2025 revealed both the opportunities and the constraints of advancing a sustainable energy transition amid accelerating technological change and geopolitical uncertainty.

1.    Peak Oil recedes as a Strategic Constraint

When M. King Hubbert first introduced the concept of peak oil, he could not have anticipated the extent to which technological innovation and capital investment would reshape access to geological resources. Peak oil theory rests on the premise that global crude oil production will reach a maximum before entering an irreversible decline.  Since the early 2000s, that assumption has been repeatedly challenged. The shale revolution enabled by hydraulic fracturing and horizontal drilling expanded U.S. crude output by roughly 170% between 2008 and 2025, reaching nearly 13 million barrels per day. At the same time, rising production from emerging producers such as Brazil and Guyana further complicated predictions of supply scarcity.

As supply constraints eased, the debate shifted toward peak oil demand, driven by expectations that efficiency gains, renewable substitution, and the electrification of transport would curb consumption. Yet by 2025, this narrative also began to fray. Slowing policy momentum on efficiency and emissions reduction, combined with accelerating electricity demand from data centres, has altered the trajectory. The International Energy Agency now projects continued growth in global oil demand well beyond earlier expectations, alongside increasing uncertainty around meeting the 1.5°C climate target.

In this context, energy markets are being shaped less by the limits of geology and more by the demands of technology.

 Major oil and utility companies are repositioning themselves as power and infrastructure providers for an increasingly digital economy, partnering with technology firms to support AI-driven growth. As the influence of peak oil narratives recedes, the coming period is likely to be defined by expanded supply, shifting demand segments, and a reconfiguration of how energy value is created.

2.  The Era of Energy Addition

The energy transition is no longer defined solely by substitution. It is increasingly shaped by geopolitical tension, national development priorities, and trade barriers that constrain the pace of decarbonization. Governments in many developed economies have begun prioritizing affordability and security over emissions targets, while the race toward an AI-enabled economy is reshaping energy demand.

Speaking at ADIPEC 2025, UAE Minister of Industry and Advanced Technology Sultan Al Jaber noted that global electricity demand is expected to rise sharply through 2040, with data centre power demand projected to grow fourfold. While renewables have expanded rapidly, rising from roughly 5% to 20% of global power generation, according to Wood Mackenzie, this growth is not keeping pace with incremental demand.

Within the technology sector, an “all-of-the-above” energy strategy has taken hold. Big Tech firms are integrating nuclear energy, particularly small modular reactors, while investing in fusion technology to power AI data centres, where energy demand is projected to rise by 160% by 2030. These dynamics signal an era of energy addition rather than simple replacement. New energy systems are being developed alongside existing fossil fuel infrastructure to meet rising global demand. Analysts therefore expect fossil fuels to remain foundational for decades, even as alternative fuels expand.

This reflects underlying development realities. For many emerging economies, affordable and reliable energy remains essential for economic growth, employment, and social stability. Electric vehicles and carbon capture technologies are largely features of wealthier nations, while fossil fuel availability and the revenues it generates remain central to national budgets elsewhere. With the global population expected to grow by nearly two billion in the coming decades and demand rising from transport, digital infrastructure, and industry, the outlook suggests pragmatic openness to all economically viable energy sources rather than a singular transition pathway.

3.  Strategic Retrenchment: Reprioritizing Core Energy Assets

For oil and gas companies, core operation centricity re-emerged as a dominant strategic theme in 2025. National policies increasingly favoured energy security and affordability over clean energy incentives, while the investor environment shifted following the re-election of U.S. President Donald Trump, whose “drill, baby, drill” rhetoric reinforced expectations that domestic fossil fuel production would be prioritized.

At the same time, the financial architecture supporting decarbonization weakened. Throughout 2024 and 2025, several major global banks withdrew from the UN-backed Net-Zero Banking Alliance, citing political pressure, concerns over potential legal exposure, including antitrust risk, and a desire for greater autonomy in setting climate strategies. These developments reduced coordinated financial momentum behind the energy transition.

Over the past five years, many energy companies have reoriented their portfolios in response to emissions targets and climate commitments. In 2025, some began refocusing on oil and gas, where returns improved following the rebound in fossil fuel prices from pandemic-era lows. BP’s decision to scrap its target of increasing renewable generation twentyfold by 2030 reflected this broader reset, influenced by sustained pressure from activist investor Elliott Investment Management, which built a near 5% stake and pushed for a sharper focus on return-generating core assets. Shell similarly slowed capital deployment in renewables.

These strategic retrenchments underscore how shareholder pressure, geopolitical dynamics, and policy fragmentation are shaping corporate mandates. Rather than signalling abandonment of the energy transition, they reflect a recalibration of capital toward assets viewed as critical for maintaining affordability, security, and financial resilience in an increasingly complex energy system.

4. Strategic Repositioning: Oilfield Services Follow the Power

While oil and gas producers pursued strategic retrenchment, oilfield service companies (OFS) signalled a phase of strategic repositioning aimed at capturing emerging sectoral opportunities. In 2025, OFS providers pivoted toward the data centre market as global drilling demand contracted by approximately 7% and WTI crude prices trailed below US$60 per barrel.

Schlumberger, Baker Hughes, and Halliburton each established dedicated divisions or partnerships to capture this opportunity.  Baker Hughes led the shift, reporting approximately US$550 million in data centre-related sales in the second quarter of 2025 alone.

Halliburton’s acquisition of a 20% stake in VoltaGrid expanded its distributed power offering, securing manufacturing capacity for 400 MW of modular natural gas systems by year-end. Schlumberger’s standalone Digital Division became its fastest-growing segment, with data centre solutions revenue doubling year-over-year to US$331 million in the first nine months of 2025.

OFS companies are well-positioned for this strategic shift. These firms are translating existing capabilities in power generation, cooling, and remote operations into solutions that support the rapidly expanding energy requirements of artificial intelligence (AI) infrastructure. Modular power units can be deployed within 12 to 30 months, compared with 5 to 7 years for traditional utility-scale projects. Technologies originally developed for electrified fracking are being adapted to meet high-density AI computing needs. This repositioning illustrates how firms can leverage core capabilities to diversify revenue without abandoning operational foundations.

 5. COP 30 and the Emerging Natural Capital Economy

At this year’s Congress of the Parties (COP), there continued to be friction over climate finance, responsibility, and the speed of fossil fuel phase-out. One interesting outcome was Brazil’s commitment to a two-month deadline for key ministries to set out plans for how to end a dependency on oil and gas. This is a subset of the country’s 2050 strategy that centres on achieving net-zero emissions and sustainable growth by leveraging its vast natural capital through large-scale restoration, bioeconomy, and attracting green finance, integrating ecological goals with economic development.

Frameworks like Brazil’s Natural Capital Roadmap offer a viable template for how nature, biodiversity, and ecosystem services can be translated into investable, risk-managed opportunities. Energy systems and climate policy are increasingly interconnected with land use, carbon offsets, and ecosystem services. Brazil’s roadmap signals how governments can operationalize natural capital into strategic planning, influencing where energy projects get built, how offsets are sourced, and how supply chains are managed. Just as oil and gas companies are repositioning toward AI energy demand, natural capital initiatives create new markets for companies that can quantify, verify, and monetize ecosystem services. Energy majors and finance institutions may need to integrate natural capital thinking into project evaluation, risk assessment, and portfolio strategy. Brazil’s initiative exemplifies how governments can turn ecosystem stewardship into a strategic lever for sustainable development and investment certainty.

Conclusion 

Energy security, resilience, and sustainability emerged as deeply interconnected priorities in 2025. Technology and innovation have transformed energy planning from a zero-sum game into more adaptive strategies. Energy availability and affordability now hinge on accurately reading market signals and deploying capital responsibly.

Rather than pursuing a singular transition pathway, multiple viable energy systems can coexist. Companies that understand and leverage core capabilities to address market constraints will gain a strategic advantage. Oilfield service firms demonstrated how operational adaptability can be used to navigate uncertainty and unlock new opportunities without abandoning foundational strengths. Brazil’s natural capital roadmap illustrated how ecological assets can be translated into credible economic and investment frameworks.

Yet strategic ambition continues to be bounded by geopolitical realities, national development imperatives, and societal stability. These forces impose necessary guardrails on both the pace and form of transition. They remind us that true energy security requires pragmatism over idealism. Resilient energy governance is therefore moving away from rhetorical ambition and toward deliberate, practical design.

References and Sources

Global Energy Demand, Oil Supply, and Peak Oil

• International Energy Agency (IEA), World Energy Outlook 2024

• International Energy Agency (IEA), Oil 2025 Medium-Term Market Report

Power Demand, AI, and Data Centres

• Wood Mackenzie, Global Power and Renewables Outlook

• Public remarks from ADIPEC 2025 (Sultan Al Jaber keynote)

Energy Transition, Energy Addition, and Policy Fragmentation

• International Renewable Energy Agency (IRENA), World Energy Transitions Outlook

• Public remarks from ADIPEC 2025 (Sultan Al Jaber keynote)

Oil and Gas Strategy and Capital Reallocation

• BP plc, Strategy Update and Investor Communications (2024–2025)

• Shell plc, Energy Transition Updates

• Elliott Investment Management, public filings and statements

• Bloomberg and Financial Times, energy sector reporting

Oilfield Services and Data Centre Power

• Bloomberg and Financial Times, energy sector reporting

Climate Governance, COP, and Natural Capital

• UNFCCC COP30 Outcomes and Briefings

• Government of Brazil, Natural Capital and Bioeconomy Strategy