Saudi Arabia’s energy minister recently stated, “Oil is no longer an energy security challenge – it’s going to be gas, electricity, predominantly minerals.” At first glance, this may sound like the end of oil as we know it—the vital resource that powers the global economy. However, it might just be a reminder of how much we still rely on hydrocarbons, only now with a growing need for more of them.
This reality was made clear when oil prices spiked following the announcement of new sanctions on Russia’s energy industry by the outgoing Biden administration. These sanctions targeted Russian oil and gas exports. If oil demand had truly been decreasing due to the rise of electric vehicles, the sanctions likely wouldn’t have caused such a price jump. But, as it turns out, demand for oil is still strong.
In fact, there’s talk of a tightening oil market, reversing the earlier predictions of a surplus. Energy analyst John Kemp recently pointed out that U.S. crude oil inventories have fallen much faster than expected since mid-2024, leaving stocks at their lowest levels for this time of year since 2015.
Similarly, oil inventories in the member states of the Organization for Economic Cooperation and Development (OECD) are also on the decline. Global oil stocks are depleting faster than the International Energy Agency (IEA) had anticipated. As a result, the IEA has reduced its forecast for oil surplus this year. However, the agency still expects a surplus, which could either be hopeful optimism or an unwillingness to face past mistakes.
The world continues to depend on oil. But in recent years, gas has become an increasingly significant part of the energy mix. This was clearly shown by Europe’s struggles with gas supply shortages, especially during the winter months. With European countries trying to reduce their dependence on Russian gas, they faced the dilemma of needing affordable alternatives. Despite political pressure, many EU states continued to import Russian LNG at record levels last year. This trend has continued into 2025, with over 800,000 metric tons of Russian LNG imported in the first two weeks of January alone.
Meanwhile, Europe’s gas storage levels are dropping fast, with only a few exceptions, approaching critically low levels due to strong winter demand. This highlights that while critical minerals, essential for technologies like wind, solar, and electric vehicles (EVs), are becoming more important, they have not yet reached the level of significance held by oil and gas.
Critical minerals are essential for the transition to clean energy. Wind turbines, solar panels, and electric cars all rely on these minerals. Saudi Arabia, which possesses some of these reserves, has expressed interest in developing them. However, the kingdom’s energy minister, Abdulaziz bin Salman, has warned against rushing into the mining of these minerals without considering the environmental impact.
He explained that many countries control a significant portion of these critical minerals, and there is intense competition to secure access to them. However, rushing to secure these resources may lead to higher emissions, increased metal prices, and higher energy costs. Extracting these minerals requires a large amount of energy, typically from hydrocarbons, despite claims from mining companies about their green machinery. The more minerals needed for energy transition technologies, the more energy—especially oil and gas—will be required to extract and process them.
This creates a cycle where increased demand for minerals leads to greater energy consumption, particularly hydrocarbons. Even with more wind turbines, there will still be a reliance on natural gas when the wind isn’t blowing.
Finally, there’s the growing role of artificial intelligence (AI) and data centers. Bin Salman emphasized that as AI, data centers, and industries like crypto mining continue to expand, so too will the demand for energy. “Can you imagine what will happen to energy demand? Can you imagine the race between mining to create energy, and energy to create mining?” he asked.
Some people argue that oil is no longer a key player in energy security, with gas taking its place. But with oil demand expected to rise again this year, it seems more accurate to say that oil and gas together are the critical commodities of our time.
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