Global investment in crude oil is projected to decline by 6% in 2025, the first substantial downturn in upstream oil spending since the COVID-19-induced slump in 2020.
This is according to the International Energy Agency’s (IEA) World Energy Investment 2025 report released on Wednesday.
Total upstream oil and gas investment is expected to fall to just under $570 billion in 2025, down from over $600 billion in 2024. The drop is attributed to weakening demand forecasts, lower oil prices, and growing economic uncertainty.
According to the IEA, the primary driver of the contraction is a sharp reduction in capital expenditure on U.S. tight oil projects.
“This decline in oil investment is driven by the economic uncertainties, the lower demand expectations, and lower prices,” said IEA Executive Director Fatih Birol.
The report also noted a marked deterioration in sentiment across global oil companies in recent months, reversing earlier expectations of flat spending levels.
Approximately 40% of the projected upstream spending will be allocated to mitigating decline rates at existing fields, rather than developing new assets.
Meanwhile, global refinery investment is expected to fall to around $30 billion in 2025, representing the lowest level in the last ten years.
The downturn in investment coincides with increased output from OPEC+ producers. The alliance, led by Saudi Arabia, has announced successive production increases despite internal resistance, particularly from Russia. The additional supply is entering an already well-supplied market, further putting pressure on crude prices.
Benchmark crude oil has declined steadily in recent weeks, with Brent currently trading below $70 per barrel.
Market analysts warn that if the current trend continues, producers with high breakeven costs may be forced to revise investment plans further.
Spending on liquefied natural gas (LNG) infrastructure is rising, with major projects in the United States, Qatar, and Canada expected to contribute to a record expansion of global LNG capacity between 2026 and 2028.
The IEA report underlines the growing divergence in energy investment flows. While oil and refining face capital constraints, gas and renewables are drawing increased interest amid long-term energy transition targets and supply security concerns.
The agency’s findings indicate that the current decline in crude investment could have implications for supply stability in the medium term, especially if demand rebounds more strongly than expected in key emerging markets.
The IEA will update its forecasts following the next round of company financial disclosures and macroeconomic revisions in Q3 2025.
