The IEA’s Bittersweet “Come to Jesus” Moment Is Here

The story of modern oil has always been about decline, denial, and rediscovery. 

When Mexico’s Cantarell field peaked in 2004, the drop was so steep it became a global parable of how quickly supergiant fields can wither and die. 

The same is true for Saudi Arabia’s Ghawar, once considered bottomless, now coughing up less than half the output it once did. In fact, it took Saudi Aramco’s IPO documents for us to really see the truth behind Ghawar’s field numbers. 

For decades, the House of Saud has reassured the oil markets that Ghawar production was steady at 5 million barrels per day — anyone that questioned those figures were ridiculed; then, we quietly learned that Ghawar’s output was closer to 3.5 million barrels per day. 

Oops.

Make no mistake, those fields were the kings of conventional oil, their long shadows covering the reality that all wells age, all reservoirs deplete, and the curve of decline is as merciless as gravity. 

And for decades, the world fed off those giants, convinced there would always be another one around the corner… until that era was gone and the market hype moved on to the massive unconventional plays that boomed since 2008 — the tight rock formations like the Bakken, Eagle Ford, and Wolfcampe shales that quickly became household names. 

Yet these tight oil saviors also came with one steep cost — the rapid decline rates that required constant drilling to keep output growing. 

Truth is, this reality should have been obvious all along, but for more than a decade we had to sit by as the IEA continually painted its picture of a world effortlessly gliding into a net zero future. 

Policymakers and investors alike took comfort in those IEA forecasts. They were neat, tidy, and aligned perfectly with the political ambitions of a world eager to decarbonize without acknowledging the messy truth of energy transitions. 

The IEA didn’t just underestimate decline rates — they attacked anyone who dared suggest that global oil supply would be in danger, and that those depletion curves were the elephant in the room nobody wanted to address.

And yet here we are. 

Just recently, the IEA released a bombshell report that reads less like prophecy and more like a panicked confession.

In it, the IEA warned that output declines from existing oil and gas fields have accelerated. 

Just how bad is it? Well, the report notes that nearly 90% of upstream oil and gas investment since 2019 has been dedicated to offset production declines from existing fields. 

Stop and think about that for a moment…

Almost every dollar spent invested in the upstream sector today is not adding new supply to meet rising demand — it’s merely keeping today’s production from collapsing tomorrow. 

If you really want to understand how the dynamic has changed in today’s oil fields, just remember that 25 years ago, conventional oil fields accounted for 97% of global oil output. 

Today, it’s less than 77%!

Fatih Birol, the IEA’s Executive Director, admitted as much, saying bluntly that only a sliver of new investment is actually expanding capacity, and the rest is plugging holes in a leaky ship.

Call it for what it is, dear reader — a complete reversal of the story line we’ve been fed for years. 

The very agency that told the world to stop funding new oil projects is now sounding the alarm that without a surge of new investment, we will walk straight into a global supply crisis!

It’s as if the arsonist has circled back, holding a fire hose, pretending they never struck the match. 

But decline rates are not new to us, are they? They didn’t suddenly appear in 2025. 

What changed is that the IEA could no longer paper over the accelerating collapse of output from conventional fields while pretending tight oil could endlessly fill the gap.

And U.S. oil production offers the clearest window into this problem. 

You see, roughly 75% of our domestic crude production comes from just five oil regions in the lower-48 states, with the Permian Basin accounting for nearly 6.2 million barrels per day. 

But unlike Ghawar or Burgan, our tight oil wells come with a ferocious decline rate that’s five times faster than the old supergiants. 

A well drilled today is already on the downslope within months, forcing producers to drill and complete new wells constantly just to replace the barrels that vanish. 

It’s a treadmill with no off-switch, and it requires relentless investment and technological innovation to stay ahead of the decline. 

Yet, my readers know just as well as I do that this is also where the opportunity lies.

If steep decline rates are the iron law of oil supply, then the companies that master the art of beating those declines will be the ones that dominate the next decade. 

In the Permian, we are already seeing operators perfect new drilling and completion technologies that squeeze more out of each well for less costs. 

Advances in longer laterals, improved hydraulic fracturing techniques, and data-driven reservoir mapping are turning what was once a desperation play into a precision business. 

In fact, productivity per well has risen dramatically compared to the early years of the shale boom, and costs per barrel continue to fall as drillers refine their methods. The very nature of shale — the rapid declines that once made it a liability — can become a competitive advantage for the players nimble enough to keep pushing the technology envelope.

The IEA spent years insisting that oil demand was on the verge of collapse, that it would peak within a few years and we can all finally move beyond fossil fuels. 

Turns out that the IEA was also wrong about peak demand, too… imagine our shock. 

Now, the same agency admits that decline rates are drinking the world’s milkshake, and that without new drilling, we face shortages and price spikes. 

The Permian drillers, mocked as reckless cowboys during the shale boom and bust cycles, now stand to benefit precisely because their expertise lies in managing the most unforgiving decline rates on earth. 

If nothing else, the IEA’s about-face should be a wake-up call. Decline rates don’t care about politics, nor do they care about climate pledges. 

Today, it is the unconventional players in the Permian who carry that burden, and the best among them are turning decline into opportunity.

Oil prices today are too low to spur the kind of investment needed to close the looming supply gap.

Trust me, that won’t last… especially now that the IEA has finally admitted what geology has been shouting for years. 

Now the opportunity belongs to those willing to bet on the companies that can deliver barrels when the world realizes just how fragile its supply truly is.

The age of easy oil is over, and the biggest winners will be the drillers in the Permian Basin who turn decline into profit while everyone else scrambles to catch up.

Here’s one Permian oil stock that should be right at the top of your list.