Why Saudi Arabia oil drive undermines global energy transition

• Saudi Arabia has embarked on a goal to increase oil output. 
• With higher oil output, the global target to meet ideals of the Paris Agreement may not be realized.
• Despite policies in favor of renewables, new investments in oil continue to spell trouble.

Saudi Arabia is increasing oil output, and the global energy transition is entering a new phase, or maybe, dying all together as drive for fossil fuel resurrects. The oil-rich country is leading a global resurgence in oil demand, and new oil finds that continue to occupy economies Africa, Brazil and elsewhere, a fine recipe for relentless effort to resuscitate the fossil fuel industry.

“Despite countries across the world committing to a net-zero future, the energy transition is unfolding slower than needed to achieve the goals of the Paris Agreement,” warns the Energy Hub in it’s report ‘Can Saudi Arabia’s Oil Sustain Its Dominance Amid Global Push for Renewables?’

The author, Oshionameh Ajayi. cautions that: “We are now seeing a reality gap emerge between net-zero goals and the actions needed to achieve them.”

While new oil findings are mushrooming across the globe and the technology to harness them is already in place; “Many low-carbon technologies are coming up against economic challenges, with weak business cases and high capital expenditure putting the brakes on accelerated rollout.”

Ajayi notes that private sector demand seems stronger than government appeal for change because “an enabling policy environment has not done enough to reduce emissions at the rate required,” .

According to the report; “The at-scale deployment of low-carbon technologies depends on the availability and affordability of key materials, and it is increasingly clear that what happens in one sector will have important implications for the other, and for the energy transition overall.”

This is so because “important interdependencies between the energy and materials sectors are impacting the speed of the transition, too.”

Faced with this reality, the interconnected nature of the energy and materials sectors as we move closer towards a net-zero world, there is need to take new action, but this may mean putting the breaks on the vice-like claws of economics first law of demand and supply.

“Our collective analysis shows that traditional technologies will continue to play a role in the energy mix for longer than previously anticipated… chiefly to keep up with energy demand from a growing population and higher living standards in developing regions,” Ajayi admits this time citing another research by advisory giant McKinsey & Company.

In view of these developments, he warns that stakeholders must look beyond the common success stories of solar and wind and understand the end-to-end value chain of the transition, including its strengths and weaknesses.

True to this fact, major energy companies like BP have reversed their focus back to oil. Just last week, media was awash with news of BP’s largest oil and natural gas discovery in 25 years off the coast of Brazil.

The discovery offers a potential big boost for the British company which has made public that it is putting in play a strategic shift away from renewable energy to refocus on fossil fuels.

BP has since then said it is seeking to bolster oil and gas in its portfolio to regain investor confidence and revive underperforming shares.

Also Read: Saudi Arabia oil drive undermines global energy transition

Saudia Arbia and new drive for oil

Saudi Arabia aims to solidify its position as the world’s top oil supplier, with Aramco, the state owned heavyweight, planning to boost production. “We will increase production to maintain Saudi Arabia’s global leadership in oil,” Aramco CEO Amin Nasser boldly told press.

He justified the move saying that the company’s investments support global economic stability and help to balance energy markets. According to the CEO, the state-owned giant will increase output to 13 million barrels daily by 2030 to meet rising global demand.

Likewise, the Aramco President and CEO Eng. Amin Nasser recently called for a more pragmatic and sustainable approach to the global energy transition, urging policymakers to integrate both renewable and traditional energy sources rather than prioritizing one at the expense of the other.

He warned against sidelining oil in favor of renewables. In his speech at the CERAWeek 2025 conference, Nasser highlighted  what he described as “the risks of current transition strategies that impose restrictive regulations on fossil fuels without ensuring sufficient renewable capacity to meet growing energy demand.”

According to the CEO of the world’s largest oil production company; “Policies designed to phase out fossil fuels too quickly could lead to significant economic challenges and supply shortages, potentially requiring an additional $6-$8 trillion annually to bridge the gap.”

“The biggest misconception about the energy transition is the assumption that traditional energy can be replaced overnight,” Nasser warned, painting the view that; “In reality, fossil fuels still supply over 80 percent of the energy in the United States, about 90 percent in China, and more than 70 percent in the European Union.”

As such; “a hasty transition without reliable alternatives is a recipe for instability,” he warned.

Putting his views into action, as of this year, Aramco outlined its production target which it said is part of Saudi Arabia’s Vision 2030, a strategy to diversify the economy and reduce dependence on oil revenues.

However, while the kingdom does have investments in renewables, it is clearly pushing for continued use of fossil fuels as the primary energy option.

Alongside Aramco, reports say other major Saudi companies Sabic, Rabigh Refining, and Petrochemicals are all advancing projects that align with the country’s energy goals which right now lean heavily on oil.

However, you also have energy experts in the kingdom urging caution against overreliance on oil. Dr. Sarah Ahmed, an energy economist at the Gulf Research Center, underscored the importance of diversification saying; “We must push for alternative energy sources to mitigate future market risks.”

That being said, she admitted that with strong global demand for oil, Saudi Arabia stands to benefit from its vast resources. “However, its long-term success depends on how well it adapts to shifting energy dynamics and pursues a more diversified energy portfolio,” she warned.

Meanwhile; “OPEC+ agreed on Sunday to raise oil production by 547,000 barrels per day for September, the latest in a series of accelerated output hikes to regain market share, as concerns mount over potential supply disruptions linked to Russia,”