Two big energy surprises

With the world now gathered for the COP climate talks in Brazil, prices for Brent (the oil, not some guy) dropped ~4% Wednesday as traders reacted to two surprising signals from:

• The oil-friendly Organization of the Petroleum Exporting Countries (OPEC) in Vienna, with 12 petrostates like the Saudis, the UAE, and Venezuela, and…
• The more renewable-forward International Energy Agency (IEA) in Paris, with 31 advanced energy consumers like the US, Europe, and Japan.

First, OPEC wound back its 2026 projections, from sounding the oil deficit alarm to seeing calmer “balanced” markets for the year ahead. And balance sounds good, right? You gotta balance that budget, diet, checkbook, opinion section, tyre-set, and/or work-life.

So where’s the OPEC surprise?

After months of deficit narratives, a sudden flip to surplus (driven mostly by faster-than-forecast jumps in oil production, particularly in the US) really caught markets off-guard.

Second, the IEA’s latest World Energy Outlook laid out three possible scenarios ahead:

• Its Current Policies Scenario (ie, if there’s no change) argues emerging markets and slow clean tech adoption will see our oil demand keep growing through 2050
• Its Stated Policies Scenario (ie, if we do what we’ve already tabled) argues we’ll hit ‘peak oil’ around 2030 thanks to proposed pro-renewable and EV policies, and
• Its Net Zero Emissions Scenario (ie, if we do whatever it takes) argues a quicker transition could trigger an even earlier peak oil, and limit global warming to 1.5°C.

So where’s the IEA surprise?

The IEA’s supporters say it’s returning to reality (reintroducing the above ‘no changes’ scenario) after years of renewable cheerleading. Even OPEC smugly says its IEA rivals have had a “rendezvous with reality”. But critics say the IEA has caved to US and oil pressure, thus eroding the world’s Paris goals, emboldening denialists, and risking our future.

So… why does all this matter to geopolitics nerds like us (and by extension, you)?

Here are the three quick IEA quotes you should know:

1. “Energy is at the heart of today’s geopolitical tensions, with traditional risks to fuel supply now accompanied by restrictions affecting supplies of critical minerals”

To really paint you a picture, the agency notes that “a single country [China] is the dominant refiner for 19 out of 20 energy-related strategic minerals”. And it warns “more than half of these strategic minerals are now subject to some form of export controls.”

Ie, we might be watching live as Guangdong cobalt processors become this century’s Malacca oil chokepoints, with China’s historic renewables rollout now helping it break one chokepoint (oil) and establish the other (renewables).

Meanwhile…

2. “Energy market dynamics are increasingly shaped by a group of emerging economies, led by India and Southeast Asia and joined by countries in the Middle East, Latin America and Africa”

Our world’s industrialisation catch-up will pull energy flows south and east, but each blackout (it was the Dominican Republic’s turn this week) re-ups the same question: how many economies are ready for an electricity demand the IEA says will surge 40% by 2035?

And speaking of surging electricity demand…

3. “Those who say that ‘data is the new oil’ will note that [data centre investment] surpasses the USD540B being spent on global oil supply”

It’s elliptically observing that our world’s AI and energy races are two sides of the same coin — in fact, the AI race sits atop an energy race. And who’s winning the energy race?

China’s electricity production (~half via coal, btw) surpassed the US in 2011, and is now more than double America’s, extending its lead every year (by roughly a Canada).

Intrigue’s Take

Some takeaways?

First, history suggests cheap power begets political power, whether it was coal empowering the Brits, or oil empowering the Americans. And a lot of the next century depends on how much China’s emergence as an electrostate carries this rule forward.

And second, while we often explore how a multipolar future might look (former US trade rep Mike Froman has lately been dubbing it “polyamorous” btw), energy is an example of how much the exact shape is still up for grabs. While 85% of our world’s AI investment over the next decade is destined for the US, China, and the EU, the associated surge in electricity demand is still only 10% of the world’s total projected demand growth.

So maybe it’s a reminder that while the US-China AI race is a big story, it’s not the only story.

Sound even smarter:

• One area that forecasts repeatedly get wrong is solar, with actual growth consistently exceeding even the most optimistic projections.
• OPEC’s full cohort (including OPEC+ members like Russia) will next meet on November 30.