President Donald Trump has made unleashing fossil fuels a centerpiece of his presidency, but his seven-month war with Iran is pushing the world away from oil and gas faster than almost anyone predicted.
Trump has called clean energy policies a "Green New Scam," and his administration has directed more than $800 million toward reviving coal power, yet the fighting has choked off production and shipping routes, and the shortages that followed have sent global oil and gas use tumbling, reported the Washington Post.
The International Energy Agency (IEA) now projects that worldwide oil demand will fall 2.5 percent in 2026 compared with last year, in a sharp reversal from its January outlook, which called for strong growth in oil and gas use. The swing is big enough to put global fossil fuel emissions on pace for their first yearly decline since the COVID-19 pandemic, even as some countries burn more coal to fill the gap.
The bigger worry for the oil industry is whether the lost demand ever comes back. Many forecasts still show consumption returning to prewar levels in 2027, but economists broadly agree that the longer an energy crisis lasts, the more likely consumers and businesses are to make lasting changes.
The Post reported that some of those changes are already underway. Drivers facing high prices and shortages are turning to hybrids and electric vehicles, and utilities cut off from liquefied natural gas shipments are leaning on wind, solar and nuclear power. Homeowners are swapping oil furnaces for heat pumps.
The Post had already reported that hybrid sales surged after Trump eliminated federal tax credits for electric cars.
Pavel Molchanov, an investment strategy analyst at Raymond James, told the Post that the IEA expects 2027 demand to "barely recover to pre-conflict levels," adding that "a portion of demand destruction may be permanent."
DNV, a global consultancy that models energy demand, has gone further. It has dropped the common industry assumption that oil and gas use will roar back once the fighting stops.
"It is time to acknowledge that we could all be wrong," the firm wrote in a recent report.
DNV pointed to surging EV sales in parts of the world. It also predicted that diesel prices will stay high whenever the war ends, which could reshape global shipping. The firm cited Europe's experience after Russia's 2022 invasion of Ukraine, when a natural gas shortage led to a lasting move away from imported fuel and a boom in renewable energy.
"For every month the conflict lasts," DNV wrote, "the probability of permanent demand destruction increases."