BAKU, Azerbaijan, June 5. Global investment in fossil fuel supply is expected to fall to $1 trillion in 2025, marking a 2% drop from 2024 and the first annual decline since 2020, according to the International Energy Agency’s latest projections, Trend reports.
The downturn reflects lower oil prices, rising operational costs, and delays in project development. Upstream oil and gas investment is projected to decrease by around 4%, with tight oil in the United States particularly hard hit - investment in upstream oil alone is expected to fall by 6% to around $420 billion.
The IEA notes that developers face mounting cost pressures due to tariffs and inflation, with unit costs for non-tight oil producers forecast to rise by about 3% in 2025. Companies are responding by squeezing margins in the oil and gas services sector.
Refinery investment is also set to reach a record low, with new capacity additions balanced out by closures, leaving global capacity flat. More than 90% of refinery spending is now occurring in emerging markets and developing economies.
Despite delays and rising costs, over $20 billion is expected to be invested in LNG liquefaction in 2025, and one new project has reached final investment decision. The period from 2026 to 2028 is expected to bring record levels of new LNG capacity, with about 40% of this expansion centered in the United States.
