The World’s Shift Away from Oil May Spark Conflict and Migration, Experts Warn

When the global economy finally turns its back on crude, it won’t be a quiet goodbye. Researchers from the think‑tank E3G argue that the transition could set off a chain of fiscal collapses, unrest and even mass migration – especially in countries that still live off oil revenues.

Take Nigeria, Algeria, Iran or Angola. In each of those places, oil makes up a huge slice of the national budget – often more than 40 % and in places like Iraq and Libya it reaches 70‑90 %. Their public services, from schools to hospitals, are funded by that money. Yet they have very little in the way of alternative industries and barely any fiscal cushions.

Demand for oil is already slumping. Renewable power is sprouting everywhere, and the recent shock of the Iran war pushed prices sky‑high, feeding inflation and political turmoil. Analysts now expect world oil consumption to level off by the early 2030s, then start to fall. That means oil‑rich governments will be scrambling for a shrinking pool of buyers.

Who will survive the squeeze? The report says the cheapest, most resource‑rich producers – Saudi Arabia and the United Arab Emirates – are likely to stay afloat longer, thanks to their low‑cost extraction and strong infrastructure. Mid‑tier producers, the ones that rely on higher‑cost extraction, are far more exposed.

It’s not just an economic story; it’s a security one. Beth Walker, co‑author of the study, warned that “governments are not thinking about and not prepared for these outcomes”. If oil‑producing states are left to fend for themselves, their fragility becomes a global risk.

Delaying the transition, she adds, is even riskier. The climate crisis is accelerating, and a half‑hearted, chaotic shift could be more destabilising than a rapid, well‑managed one.

To build the scenario, E3G spent two years war‑gaming the future with over a hundred policymakers and experts. Their findings echo what Bob Ward of the Grantham Institute has been saying: the highest‑cost producers – think the North Sea or some Latin American fields – will feel the shock first as prices drop.

Numbers paint a stark picture. By 2030, Algeria could see an 87 % plunge in oil revenues; Nigeria could lose more than 60 %. With such shortfalls, basic services will crumble, debt burdens will swell, and social contracts will fray. In Angola and Mexico, for example, more than a quarter of government income already goes to servicing debt.

Walker describes a possible cascade of crises: unrest and migration out of Algeria; a fragile settlement in Iraq that could spill into Gulf stability; weakened state capacity in Nigeria, the most populous African nation, with ripple effects across the continent; and competition for oil infrastructure in Libya that threatens European security. “Most of these problems are a much larger scale than Venezuela,” she notes, “and they could all unravel just as the UK and Europe’s capacity to contain live conflicts is drained.”

Fixing the looming mess won’t be easy, but the tools exist – they’re just scattered across different policy boxes. The International Monetary Fund, the World Bank, private financiers and donor governments will need to coordinate. As Maria Pastukhova, another report author, puts it, “major demand powers need to communicate more clearly about their future demand and weave adjustment into foreign, economic and climate policy.”

China’s oil appetite has been the dominant driver of demand for decades, but it is now waning as electric vehicles gain ground. India’s trajectory remains uncertain; its future consumption could tip the balance between a smoother decline and a harsher shock.

The message is clear: the world can’t afford to sit on the sidelines while oil‑dependent states stumble. Proactive, coordinated support is the only way to keep the transition from turning into a series of fiscal emergencies, conflict flashpoints and massive migration flows.