The Organisation of the Petroleum Exporting Countries (OPEC) has confidently projected that global oil demand will continue to rise, reaching 116 million barrels per day (bpd) by 2045. This forecast, articulated by OPEC Secretary General Haitham Al Ghais, stands in stark contrast to the International Energy Agency’s (IEA) recent prediction that oil demand will peak by 2029, levelling off at around 106 million bpd towards the end of this decade.
OPEC’s optimistic outlook
Al Ghais, writing in the publication Energy Aspects, described the IEA report as “dangerous commentary,” arguing it could lead to unprecedented energy market volatility. He contended that the IEA’s projections, which suggest a decline in oil demand starting in 2030, are both misleading and potentially harmful to global economic stability.
“OPEC’s forecast is based on robust demand growth,” Al Ghais noted, highlighting the organisation’s expectation of a 4 million bpd increase over 2024 and 2025. He also pointed out that other forecasters predict an expansion exceeding 3 million bpd during this period. “Even the IEA sees growth of 2 million bpd over these two years, followed by 0.8 million bpd in 2026, before projecting a dramatic slowdown,” he added.
Divergent forecasts and their implications
The Paris-based IEA, which advises industrialised nations on energy policy, recently revised its peak oil demand timeline from 2030 to 2029. The agency anticipates that oil demand will begin to contract in the following decade, driven by increased supply from the United States and other non-OPEC countries.
This revision from the IEA reflects broader shifts in energy consumption patterns, particularly the accelerated adoption of renewable energy sources and advancements in energy efficiency. The IEA’s stance suggests a future where the global reliance on oil diminishes, aligning with climate goals and the transition to greener energy systems.
OPEC+’s strategic output cuts
In response to market dynamics, OPEC+—a coalition that includes OPEC members and allies like Russia—has implemented a series of deep output cuts since late 2022 to stabilise prices. These cuts amount to a total of 5.86 million bpd, or about 5.7% of global demand. On June 2, the group agreed to extend cuts of 3.66 million bpd until the end of 2025. Additionally, the remaining 2.2 million bpd cuts will be gradually phased out from October 2024 over a year.
These strategic moves underscore OPEC+’s commitment to managing supply to support market balance and price stability amidst fluctuating demand forecasts.
The broader energy debate
Al Ghais criticised the IEA’s previous predictions, such as the anticipated peak in gasoline demand in 2019 and coal demand in 2014, which he argues have proven inaccurate. “Such narratives have consistently been proven wrong,” he said. “The IEA’s anti-oil narrative is not only unrealistic but also poses risks to global economic growth.”
The debate between OPEC and the IEA reflects broader tensions in the energy sector regarding the pace and impact of the transition from fossil fuels to renewable energy sources. OPEC’s position highlights the ongoing relevance of oil in the global energy mix, especially for emerging economies that continue to see robust demand growth.
Future outlook
The conflicting forecasts from OPEC and the IEA signal a complex future for the oil market. While OPEC remains bullish on sustained demand growth, the IEA’s projections underscore the transformative shifts in global energy consumption. As countries strive to balance economic growth with environmental sustainability, the energy sector’s trajectory will be shaped by technological advancements, policy decisions, and market dynamics.
For stakeholders in the global energy landscape, understanding these divergent perspectives is crucial. The ongoing dialogue between organisations like OPEC and the IEA will continue to influence strategic decisions, investments, and the broader narrative around the future of energy.