According to estimates by the International Energy Agency, global demand for crude oil shrank in 2008 for the first time in 25 years, with especially large drops in the United States and Japan. The global economic slowdown is likely to cause this decline to continue in 2009, and the softening of the demand-supply situation for energy and resources is expected to persist for some time to come.

Commodity prices have fallen sharply in response to the sudden departure of speculative funds from the market, and there is now a sense that the declines have overshot their marks. We expect to see a gradual return to levels in keeping with actual demand and geopolitical risks.

Given the growth of demand from emerging economies, notably China and India, along with the persistence of bottlenecks on the supply side—aging facilities, reduced new investment, state controls on development, dependence on the Organization of Petroleum Exporting Countries for crude oil—the markets can be expected to tighten over the medium to long term.

The IEA's long-term outlook is for global demand for crude oil to grow at an average annual rate of 1.0%, coal at 2.0%, and natural gas at 1.8% between now and 2030. In other words, reliance on fossil fuels is expected to continue, with only a limited shift to biomass and other renewable energy sources.