OPEC’s Optimistic Outlook on World Oil Demand
In a recent annual outlook, the Organisation of the Petroleum Exporting Countries (OPEC) raised its forecasts for world oil demand for the medium and long term. This positive outlook is driven by growth in regions such as India, Africa, and the Middle East, as well as a slower transition to electric vehicles and cleaner fuels.
Key Points from OPEC’s 2024 World Oil Outlook:
- OPEC expects world oil demand to reach 118.9 million barrels a day (bpd) by 2045, which is around 2.9 million bpd higher than previously anticipated.
- The forecast extends to 2050, with demand expected to hit 120.1 million bpd by then, significantly surpassing other industry projections.
- Contrary to forecasts from other entities like BP and the International Energy Agency (IEA), OPEC believes that oil demand will continue to rise, with no peak in sight.
- OPEC emphasizes the need for increased investment in the oil industry, estimating a requirement of US$17.4 trillion by 2050 to meet demand.
Higher Medium-Term Demand Forecasts
OPEC has also raised its medium-term demand forecasts, with expectations for strong economic growth leading to increased oil consumption. By 2029, world demand is projected to reach 112.3 million bpd, highlighting a more optimistic outlook compared to previous estimates.
Comparing OPEC’s 2029 Forecast with the IEA:
- OPEC’s 2029 forecast exceeds that of the IEA by more than 6 million bpd, indicating a significant disparity in expectations for future oil demand.
- The gap between OPEC and the IEA’s forecasts underscores differing perspectives on the trajectory of oil consumption in the coming years.
Despite the growing adoption of electric vehicles, OPEC asserts that vehicles powered by combustion engines will still dominate the global fleet in 2050, comprising over 70% of the total. The organization acknowledges challenges facing the electric vehicle market, such as infrastructure limitations and access to essential minerals.
OPEC’s Strategic Approach to Market Support
OPEC and its allies, collectively known as OPEC+, have implemented supply cuts to stabilize the market. The report anticipates OPEC+ expanding its share of the oil market to 52% by 2050, as US and non-OPEC+ output are projected to peak in the coming decades.
Overall, OPEC’s optimistic outlook on world oil demand underscores the organization’s confidence in the longevity of oil as a vital energy source. By emphasizing the need for continued investment and collaboration among stakeholders, OPEC aims to secure a sustainable future for the global oil industry.