Shell predicts AI-fueled oil demand surge by 2030s

Shell has predicted a significant surge in oil demand driven by AI technologies by the 2030s, in a bold forecast that underscores the transformative impact of artificial intelligence (AI) on global energy markets.

The energy giant’s latest scenarios, outlined in its 2025 Energy Security Scenarios report, highlight how the growing energy needs of data centers, AI infrastructure, and digital economies could reshape the global energy landscape, even as the world continues its transition toward cleaner energy sources.

AI and rising energy demand

Shell’s analysis suggests that the proliferation of AI technologies, including machine learning, automation, and advanced data processing, will require vast amounts of energy to power data centers and computing infrastructure. These facilities, which are the backbone of the digital economy, are already consuming significant amounts of electricity, and their energy needs are expected to grow exponentially as AI applications become more widespread.

The report notes that while renewable energy sources like wind and solar are expanding rapidly, they may not be able to meet the surging demand alone. As a result, oil and natural gas are likely to remain critical components of the global energy mix, particularly in regions where renewable infrastructure is still under development. Shell’s scenarios suggest that the energy demands of AI and digital technologies could delay peak oil demand, pushing it further into the 2030s.

LNG growth in the near term

In addition to its long-term predictions, Shell’s report highlights the near-term growth of liquefied natural gas (LNG) as a key energy source. The company sees significant potential for LNG expansion in the coming years, driven by its role as a cleaner-burning alternative to coal and its ability to provide reliable energy for industrial and digital infrastructure.

According to Shell, LNG demand is expected to rise by more than 50% by 2040, with Asia leading the way as the largest consumer. This growth is partly fueled by the need to support the energy-intensive operations of data centers and AI-driven industries. Shell’s CEO, Wael Sawan, emphasized the importance of LNG in ensuring energy security during the transition to a lower-carbon future, stating that it will play a “critical role” in meeting global energy needs.

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Net-Zero emissions: Timing remains uncertain

While Shell’s scenarios acknowledge the global push toward net-zero carbon emissions, they also highlight the uncertainty surrounding the timing and pace of this transition. The report outlines two primary scenarios: the “Archipelagos” scenario, which envisions a slower, more fragmented energy transition, and the “Sky 2050” scenario, which assumes a faster, more coordinated global effort to achieve net-zero emissions.

Under the Archipelagos scenario, oil demand remains robust well into the 2030s, supported by the energy needs of emerging technologies like AI. In contrast, the Sky 2050 scenario envisions a more rapid decline in oil consumption, driven by aggressive climate policies and technological advancements. However, Shell cautions that even in the Sky 2050 scenario, the energy demands of AI and digital infrastructure could create challenges for achieving net-zero targets.

Implications for energy industry

Shell’s predictions have significant implications for the energy industry, particularly for companies navigating the dual challenges of meeting growing energy demand and reducing carbon emissions. The report underscores the need for a diversified energy strategy that includes both traditional fossil fuels and renewable sources, as well as investments in carbon capture and storage (CCS) technologies.

For oil and gas companies, the projected surge in demand driven by AI represents both an opportunity and a challenge. On one hand, it offers the potential for continued growth in the medium term. On the other hand, it highlights the urgency of accelerating the transition to cleaner energy sources to avoid exacerbating climate change.

Innovation & collaboration

Shell’s report concludes with a call for greater innovation and collaboration across the energy sector. The company emphasises the importance of developing new technologies to improve energy efficiency, reduce emissions, and integrate renewable energy sources into the grid. It also stresses the need for policymakers, businesses, and consumers to work together to create a sustainable energy future.

As AI continues to transform industries and drive economic growth, its impact on energy demand will be a critical factor shaping the global energy landscape. Shell’s latest scenarios provide a timely reminder that the path to a sustainable future will require careful planning, investment, and a balanced approach to meeting the world’s energy needs.

In the coming years, the interplay between AI-driven demand and the energy transition will be a key area to watch, as it will determine not only the future of the oil and gas industry but also the success of global efforts to combat climate change.