This year was always shaping up as a defining one, with war still raging in Ukraine, a ceasefire being reached in Gaza and climate policy coming to a head at COP30 in Brazil. The start of a second Trump presidency with its early pronouncements on the wars and on trade tariffs only adds to the existing geopolitical tension.
Companies in the energy and natural resources sectors must navigate through all of this uncertainty. Decisions have to be made on capital allocation, including how much to invest in legacy fossil fuels versus low carbon energy. The scent of more consolidation after record M&A spend over the last 18 months is still in the air for Big Oil, and may also be coming to the mining sector. High volatility in commodity prices is expected and could be accentuated in the event of tariffs and a trade war. The power sector, ignited by the emerging boom in data centres and AI, will need policy support to deliver the timely, 24/7 clean power the tech sector wants.
What are the opportunities, challenges and risks for the energy and natural resources sectors in 2025? Here are five key trends.
1. Brave new world
The new Trump administration is out to make a mark in global trade, climate policy and geopolitics, all with potentially profound implications for energy and natural resources.
The administration’s plans for trade tariffs pose a serious threat to global economic growth in 2025. We forecast global GDP growth of 3%, up from 2.7% in 2024. Tariffs could knock 50 basis points (annualized) off GDP growth assuming partial retaliation by major trade partners. The impact on commodity demand would be negative. Global oil demand in 2025, for example, would be 0.5 million barrels per day (b/d) lower, wiping out half a year’s growth.
Trump also has decided to withdraw the US from the Paris Agreement. Global emissions have continued to rise since 2015, with no major country currently on track to meet its nationally determined contributions (NDC) goals for emissions reduction by 2030. Without the US, the chances of countries raising their NDC targets to put the world on track for a 2°C pathway or lower ahead of COP30 in Brazil later this year will be remote.
Delivering peace to Ukraine and the Middle East is high on Trump’s agenda as a geopolitical statement. While the challenges are obvious, the peace dividend – not least for the global economy – can’t be overstated. The implications for commodity markets may be less positive. Ending the war would reduce trade friction and likely lead to higher supply across most commodities and softening prices. However, European politicians are likely to resist any moves toward a swift resumption of piped gas into Europe.
2. Capital allocation and finance
Investment in the supply of energy and natural resources will reach record levels in 2025, with spend exceeding $1.5 trillion over our forecasts, up 6% in real terms on 2024. The forecast is for capital investment across power and renewables (excluding wires), upstream oil and gas and metals and mining.
While overall spend is increasing, the growth rate is half that of the early part of the decade. Capital discipline is a factor in all sectors, in part reflecting caution on the pace of the energy transition. Low carbon’s share of investment (renewables, hydrogen, CCUS and critical metals for the transition) climbed sharply from 32% in 2015 to 50% in 2021 but has stalled since. To meet the goals of the Paris Agreement, we estimate that low carbon spend will have to increase by 60% by 2030.
3. European oil and gas majors’ options for corporate activity
Oil and gas companies have been actively positioning for a slower-paced transition since 2023 and the expectation that oil and gas demand will be resilient into next decade. US majors have used highly rated equity to acquire US-listed independents.
The big questions are if, when and how Euro majors Shell, BP and Equinor will move to strengthen upstream in response.
We expect the Euro majors’ primary goal now is to bolster finances to create options for deal-making in 2026. That means their focus this year will again be on improving portfolio quality (e.g. selling non-core assets), cost efficiencies – including more innovative partnerships – and driving up free cash flow to boost dividends. However, weak oil and gas prices could provide an opportunity for a Euro major to strike out with a transformational corporate deal this year.
4. A volatile year ahead for oil, gas and metals prices
OPEC+ faces another testing year. The strategy to support price has worked well, but holding the Brent price above $80/barrel for the fourth year in a row in 2025 looks very challenging. The ongoing resilience of non-OPEC supply has left OPEC+ still holding 6 million b/d of supply off the market. We don’t expect much of a window for more OPEC+ oil again in 2025 and forecast that Brent will slip to an average of $70 to $75/barrel.
Natural gas prices look set to be both higher and more volatile through 2025. With only three major LNG projects in ramp-up all year, the market will be tighter ahead of new volumes arriving in 2026.
Copper prices entered 2025 at $4.15/lb, 20% below the highs of last May. We are bullish short and long term. This year, we expect prices to recover, averaging $4.50/lb based on a supply deficit with new mine supply lagging perky demand in the US and China.
5. Power and renewables: a year of accelerating innovation
Lengthy permitting and interconnection processes have been two of the biggest bottlenecks to faster renewables growth in power systems globally. There are signs that the penny has dropped, and that 2025 could be the start of a new era for renewables. Germany has demonstrated the impact permitting reform can make: Since implementing reforms in 2022, awarded permits for onshore wind have increased 150%.
Permitting reform will likely be a big focus for the Trump administration in 2025. On interconnections, the reforms started by FERC in 2023 will begin to have an impact. At least one independent system operator, Midcontinent, will be rolling out new automated software processes that will greatly reduce the two to four years that have been required to complete an interconnection study.
Delivering the power to support the proliferation of data centres will also be front of mind for all governments in 2025, not least the US, where the competition to build them has intensified. Compared with our October analysis, capacity in the projects we are monitoring has doubled to 100 GW, and more US states want a piece of the action.
An unintended consequence of the data centre boom over time could be higher US natural gas prices as demand rises, with a knock-on effect for electricity prices. Like gasoline in the run-up to the November election, electricity prices could become a political hot potato.
This Op-Ed was first published by the World Economic Forum.
