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The oil and gas market’s attention has turned to a new initiative to end Russia’s war in Ukraine. Reuters reported on Wednesday that Washington is putting pressure on Ukraine to accept a U.S.-drafted framework to end the war by giving up territory and some weapons. On its face, the plan looks like a non-starter for President Volodymyr Zelenskiy, but the White House appears intent on cementing a deal.

The prospect of ending the nearly four-year long conflict is easing market concerns about further U.S. sanctions – a big change from last month when President Trump surprised investors by imposing sweeping measures on Russia’s top two oil companies.

Meanwhile, the U.S. President hosted Saudi Arabia's de-facto leader Crown Prince Mohammed bin Salman in Washington for a glitzy state visit this week. This was a meeting between the world’s top oil exporter (Saudi Arabia) and the world’s top oil producer (America), yet crude was not on the top of the agenda. Still, Saudi’s national oil company did sign 17 preliminary deals with U.S. companies worth a potential $30 billion overall – so that’s something.

Turning to the COP30 climate summit in Belem, host Brazil has so far failed to land an early deal on new plans to curb emissions. However, President Luiz Inacio Lula da Silva remained upbeat about the prospects of making progress in the last two days of the summit. Ultimately, talks will likely go down to the wire, as has been the case in many recent summits.

A central issue in the COP30 talks is whether countries will agree to a "roadmap" for transitioning the world away from fossil fuels.

That’s a big deal because, as the International Energy Agency indicated last week, if government policies don’t change, fossil fuel use could continue to grow into 2050, shattering any chance of limiting global warming to 1.5 degrees Celsius above pre-industrial levels.

Yet investors should not be hoodwinked by these negative vibes. The fact remains that spending on renewables and low-carbon technologies is growing fast. More on this below.

Here are a few more headlines and column from my ROI colleagues:

I love to get your thoughts and comments, so don’t hesitate to contact me at ron.bousso@thomsonreuters.com or follow me on LinkedIn.

As mentioned above, stalled climate negotiations at COP30 and stubbornly high fossil fuel demand reflect the growing market consensus that the energy transition has slowed. But the risk now is that investors lose faith in a green shift that is continuing to move in one direction.

Much has changed since 195 governments sealed the landmark Paris agreement to battle climate change ten years ago. The world’s shift away from fossil fuels was rattled by the energy price shock following the war in Ukraine, economic challenges in the wake of the Covid-19 pandemic, U.S. President Donald Trump's retreat from clean energy policies and political polarization globally.

This does not mean the energy transition has not moved forward, but it is doing so in a more fractured manner than signers of the Paris agreement expected.

This changing sentiment was on full display last week when the IEA unveiled a new outlook showing that oil and gas demand – which was previously expected to peak in the 2030s – may continue rising into the 2050s based on current government policies.

The IEA’s Current Policies Scenario (CPS), which was produced following fierce criticism by Trump's pro-fossil fuel administration, assumes climate policies and regulations will either be frozen or, in some cases, reversed in the coming decades.

Spending is booming

A far more realistic scenario may be found in the agency’s Stated Policies Scenario (STEPS), which takes into account existing policies as well as those not yet turned into law that are viable under current market and economic conditions.

Under STEPS, coal consumption would peak before 2030, with oil demand rising by 2% between now and 2030 to 102 million barrels per day, before gently declining. Natural gas demand would level off after 2035.

This assumes that EV sales rise from over 20% of total vehicle sales today to more than 50% by 2035, displacing 10 million bpd of oil consumption.

So which scenario, CPS or STEPS, appears more likely?

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