A 'demand decade' ahead for energy? BP, Baker Hughes CEOs weigh the investment outlook

A “demand decade” means energy demand is expected to keep growing over many years, rather than rising briefly and then slowing. Simonelli uses the phrase to describe a longer-term outlook supported by several large economic and social trends. It matters because stronger demand can create opportunities for companies building energy infrastructure.

The main mechanism is simple: more consumption requires more equipment and networks to deliver energy. Simonelli pointed to AI, population growth, and developing nations. These forces can increase electricity use, fuel consumption, or both. He expects capital investment to improve and increase over time as demand expands.

The outlook is not risk-free. RWE CEO Markus Krebber also sees growing electricity demand from AI and electrification, but he expects computing-related expansion to come slowly. Geopolitical tensions, supply-chain pressure, interest rates, and uncertain oil prices could limit how quickly demand becomes profitable.

Several forces are expected to raise energy or electricity use. AI requires computing capacity and the electricity to operate it. Electrification shifts more activities toward electricity. Population growth adds households, transport needs, and economic activity. Developing nations can also consume more energy as their economies and infrastructure expand.

The key mechanism is cumulative demand. More people and greater economic activity increase energy use, while AI and electrification can make electricity especially important. RWE CEO Markus Krebber said these trends were driving electricity demand. Baker Hughes CEO Lorenzo Simonelli also identified AI, population growth, and developing nations as reasons for a longer period of consumption growth.

The timing remains uncertain. Krebber said planned computing expansion and its required power would come, but probably slowly. That creates investment opportunity, yet geopolitical tensions, supply-chain pressures, and higher interest rates may complicate the projects needed to meet rising demand.

The article does not give an exact development timetable or a precise production lifespan. It says new oil and gas projects can take years to develop and remain in production for decades. That means companies must commit capital well before they know exactly what future demand and prices will be.

The mechanism is long-term exposure. A project approved today may begin producing years later, then continue operating for decades. Investors therefore compare expected future supply, demand, and oil prices rather than relying only on current conditions. BP CEO Meg O’Neill said the wide range of global energy demand forecasts is an important consideration in investment decisions.

This long horizon increases uncertainty. O’Neill said companies need to plan for a lower-price environment. If prices are weaker when a project starts or during its long operating life, expected revenue and profitability may fall. Projects can therefore remain strategically important while becoming financially harder to justify.

Higher energy consumption requires a larger and more dependable delivery system. Energy must be moved from production sites to users and stored when supply or demand changes. If existing networks are too small or concentrated around vulnerable bottlenecks, rising use can create disruptions and shortages.

The mechanism is capacity and resilience. More storage can help manage uneven supply and demand. More pipelines can move greater volumes and provide alternative routes. Eliminating choke points reduces the risk that one constrained location disrupts wider energy flows. Simonelli said the Middle East conflict highlighted this need for resilient infrastructure.

The investment opportunity is broad but uneven. Schneider Electric CEO Olivier Blum said some Persian Gulf projects slowed because of the conflict. Still, he said the mid-term opportunity for more infrastructure had increased. Industry activity is expected to rise by a low-single-digit percentage in 2027, according to Simonelli.

Geopolitical conflict makes energy investment less predictable. It can slow projects, disrupt flows, or force companies to spend more on resilience. Supply-chain pressure creates another problem by making equipment, materials, and construction capacity harder to secure. Higher interest rates raise the cost of borrowing for capital-intensive projects.

Together, these forces weaken the investment case. A company may see strong future demand but face delays, higher construction costs, and more expensive financing. RWE CEO Markus Krebber described this as a huge investment opportunity combined with a very challenging investment environment. Schneider Electric’s Olivier Blum also said some Persian Gulf projects had slowed because of the Middle East conflict.

The result may be slower deployment even when demand is rising. Krebber said computing capacity and its power needs would come, but probably slowly. Companies must therefore balance growth opportunities against uncertainty, funding costs, supply constraints, and changing geopolitical conditions.

An oversupplied oil market means available production exceeds demand. When Middle Eastern oil flows return to normal, more barrels could reach global markets. Energy Aspects projects that this combination could produce an oversupplied market in 2027 and 2028, according to Richard Bronze.

The key mechanism is the balance between supply and demand. If supply grows faster than consumption, buyers have more choice and sellers face pressure to reduce prices or accept weaker terms. The article does not identify every source of potential supply, but it specifically links the forecast to the return of Middle Eastern flows to normal levels.

This possibility matters for investment. BP CEO Meg O’Neill said companies need to plan for a lower-price environment. New oil and gas projects take years to develop and can operate for decades, so an oversupply during their lifetimes could reduce expected returns and make investment decisions more cautious.

Oil prices are shaped largely by the balance between available supply and demand. When buyers want more oil than producers can provide, prices tend to face upward pressure. When production exceeds consumption, sellers face downward pressure. The article’s oversupply warning for 2027 and 2028 illustrates how returning Middle Eastern flows could weigh on prices.

The mechanism matters because project economics depend on expected revenue. A long-term oil project requires major investment before production begins. If oil prices are lower than expected, each barrel may generate less income, while construction and financing costs remain. That can reduce profit margins and make the project less attractive.

BP CEO Meg O’Neill said companies need to plan for a lower-price environment. This caution is especially important because projects can take years to develop and remain in production for decades. Investors must therefore consider price uncertainty across a long operating period, not just current prices.