The range of plausible outcomes has widened substantially for the global energy system, according to McKinsey & Company’s Global Energy Perspective 2026. The new report finds that there is no longer a single 'most likely' future for the sector and that business leaders need to prepare for a range of strategies that can perform across fundamentally different energy landscapes.
The analysis suggests that the ongoing energy transition – impacted by the volatile market conditions and a series of back-to-back grey swan events that are becoming more frequent – is increasingly becoming an energy expansion. Global energy demand grew 2.7% in 2025, with oil, gas, coal, and renewables all increasing simultaneously, with data centres the fastest-growing load segment in OECD power markets and projected to consume 10 - 15% of global power by 2030. That shifts the central question from whether the world will need more energy, to what will supply that growth, at what cost, and with what implications for security and emissions.
McKinsey’s 2026 report also widens the aperture with four new scenarios, a revised bottom-up energy model and more holistic energy-system view that explores affordability and security alongside decarbonisation and pace of economic growth through to 2050. The expanded scenarios explore futures ranging from continued growth in fossil-fuel demand to accelerated decarbonisation, and from integrated global markets to a fragmented energy order.
“With geopolitical disruption, security and affordability concerns impacting energy systems around the world, business leaders face significant operational and strategic complexity at a time when staying on course to meet decarbonization goals remains crucial,” said Humayun Tai, Senior Partner and Global Leader of McKinsey’s Energy & Materials Practice.
“Over the past year, the energy transition has become an energy expansion, with total energy demand up 2.7% and every major energy source growing simultaneously. These combined forces underscore that the cost of not thinking broadly enough about the range of possible outcomes has never been higher. The ongoing disruption in the Strait of Hormuz is the clearest example of this risk: maritime traffic through the world’s most critical energy chokepoint fell more than 90%, energy prices surged across fuels and continents, and strategies built around diversified LNG were tested in real time.”
Among the report’s major insights:
- Geopolitical fragmentation adds a material risk premium to energy. In the Fragmented Energy Order scenario, rebuilding concentrated supply chains outside China could raise solar capex by 20 - 25% and battery-storage capex by 40 - 50% in the European Union and the United States. Trade friction could also raise fuel costs through longer routes, higher insurance costs, and reduced trading flexibility.
- Artificial Intelligence is the biggest growth segment but the post-2030 demand picture is highly uncertain.Data centers are the fastest-growing load segment in OECD power markets, with electricity demand from data centers alone growing at a projected 24% CAGR to 2030 in the Continued Momentum scenario. Beyond that timeframe, the pipeline becomes highly uncertain, and could be dampened by efficiency breakthroughs in computing power.
- The grid is the energy transition’s ultimate speed limit. Transmission, storage, firm capacity, permitting, and interconnection now determine how quickly low-cost generation becomes reliable, usable energy. Across all scenarios, infrastructure readiness is already the most common binding constraint, when it lags behind, electrification stalls, regardless of how cheap renewables become.
- The next energy crisis is as likely to be driven by equipment, labor, batteries, or critical minerals as it is by barrels of oil. An increasingly electrified and digitized energy system introduces critical dependencies across equipment, minerals, semiconductors, ports, grids, and digital infrastructure. Energy security is now a system-architecture challenge, not simply a fuel-diversification challenge.
- In a high-growth world, oil demand could reach nearly 130 million bpd by 2035 – a 30% increase from today. In the Hydrocarbon Resilience scenario, oil demand is projected to grow by more than 2.5 million barrels per day annually over the next decade – roughly twice the growth rate of the previous decade. This underscores the risk of underinvestment if companies plan exclusively around an early peak in oil demand.
Diego Hernandez Diaz, Partner, added: “What this points to is a period of genuine uncertainty for the energy system. AI, geopolitical fragmentation and technology cost breakthroughs are all visible today, but their impact could develop in very different ways over the next decade. Our aim is to help executives understand those risks and opportunities, recognise the market signals that may warrant a change in direction, while building portfolios that remain robust across a range of possible futures but clearly take a position into the future evolution of the system.”
The report argues that these uncertainties make scenario planning an increasingly important strategy-management capability. Rather than attempting to identify one correct forecast, organisations can use scenarios to identify where their strategies become vulnerable, determine which options to preserve, and track the market signposts that should trigger changes in capital allocation and strategic direction.
Read the full report here.