Oil: why higher prices will complicate the energy transition

Yet paradoxically, higher oil prices also provide incentives to oil companies to spend more on exploration and production – a potential step in the wrong direction for achieving net zero emissions. And in developing countries that depend heavily on oil exports, higher prices mean more money for spending on society, which boosts government popularity. So they too may prioritise greater oil exploration and production, potentially at the expense of developing renewables and meeting nationally defined carbon targets.