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OPEC Raises Forecast of Global Oil Demand, Peak Crude Demand Still Away
OPEC has revised its medium- and long-term projections for global oil demand upward. The oil-producing consortium stated that meeting this increased demand would necessitate a substantial $14 trillion investment in the crude sector. This development comes even in the face of a rapid expansion of renewable energy technologies.
However, this long-term oil demand projection from OPEC differs from that of the International Energy Agency (IEA), the world’s primary energy watchdog. Currently, OPEC and the IEA, two prominent entities in the energy industry, are engaged in a debate over the concept of peak oil demand.
According to OPEC’s 2023 World Oil Outlook, the organization anticipates global demand to reach 116 million barrels per day (bpd) by 2045. This is an increase from 99.6 million bpd in 2022 and approximately 6 million bpd more than its prediction in the previous year’s report.
OPEC also emphasized the potential for even higher growth, primarily driven by nations such as India, China, other Asian countries, Africa, and the Middle East. As said, OPEC predicts an investment requirement of $14 trillion to meet the long-term oil demand. This translates to $610 billion on average per year. The group also added that it’s important to meet these investment requirements. This would be ultimately beneficial to both consumers and producers.
For the medium term, OPEC also predicts the oil demand to reach 110.2 million bpd in 2028. Speaking on the development, OPEC Secretary General Haitham al-Ghais said:
“Recent developments have led the OPEC team to reassess just what each energy can deliver, with a focus on pragmatic and realistic options and solutions. Calls to stop investments in new oil projects are misguided and could lead to energy and economic chaos.”
OPEC and IEA at Odds
OPEC’s predictions stand in stark contrast to those of the International Energy Agency (IEA), which declared last month that the world was at the “beginning of the end” of the fossil fuel era. In an op-ed featured in the Financial Times, IEA Executive Director Fatih Birol, for the first time, asserted that the demand for coal, oil, and gas would all peak before 2030, followed by a decline in fossil fuel consumption as climate policies come into effect.
Birol’s assessment is rooted in the IEA’s forthcoming World Energy Outlook report, a highly influential publication set to be released in October.
Birol celebrated this forecast as a “historic turning point” but cautioned that the projected declines would fall “far short” of the necessary steps to limit global warming to 1.5 degrees Celsius above pre-industrial levels, a critical threshold in the fight against climate change, with fossil fuel use being the primary driver of this crisis.
OPEC strongly criticized the IEA’s forecast of peak fossil fuel demand before the decade’s end, labeling the IEA’s narrative as “extremely risky”, “impractical”, and “ideologically driven”. OPEC had previously urged the IEA to exercise caution in undermining investments in the industry.
Even before Birol’s recent op-ed, the IEA had hinted at the possibility of peak oil demand. The relationship between OPEC and the IEA has become increasingly strained in recent years, with Birol criticizing the pace at which the producer alliance increased output rates as it unwound the drastic production cuts implemented in response to the Covid-19 pandemic.
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OPEC Raises Forecast of Global Oil Demand, Peak Crude Demand Still Away
