OPEC bumps up long-term oil demand forecast, calls for US$14 trillion investment

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In its annual outlook, the Organization of the Petroleum Exporting Countries (OPEC) has raised its world oil demand forecasts for the medium and long term. The organization emphasized the need for US$14 trillion in investments to meet this demand, even as renewable fuel use grows and electric cars become more prevalent.

The outlook provided by OPEC in its 2023 World Oil Outlook contrasts that of other forecasters, such as the International Energy Agency (IEA), which suggests that demand might peak this decade.

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For OPEC, another decade or more of rising consumption would be a significant boost, as its 13 member nations heavily rely on oil income. OPEC has stressed that oil should remain a part of the energy transition and has cited decisions by some governments and companies to slow their retreat from fossil fuels.

OPEC Secretary-General Haitham Al Ghais stated, “Calls to stop investments in new oil projects are misguided and could lead to energy and economic chaos.” He noted that the required investment in the oil sector is estimated at US$14 trillion by 2045, up from last year’s estimate of US$12.1 trillion.

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OPEC anticipates that world oil demand will reach 116 million barrels per day (bpd) by 2045, approximately six million bpd higher than what was expected in the previous year’s report. The growth is expected to be driven by China, India, other Asian nations, Africa, and the Middle East.

The IEA, which advises industrialized countries, has suggested that global coal, oil, and natural gas consumption may peak before 2030. However, OPEC remains optimistic about oil demand growth.

OPEC has also raised its demand forecasts for the medium term, projecting strong demand growth until 2028. Despite economic challenges, such as interest rate hikes and road transport growth, oil demand remained resilient in 2023, according to the report.

The forecast indicates that world demand in 2028 will reach 110.2 million bpd, up from 102 million bpd in 2023. OPEC predicts that oil use in 2027 will reach 109 million bpd, up from the estimated 106.9 million bpd in 2022.

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OPEC had initially predicted a plateau in global oil demand after 2035, in its 2022 report. However, the latest outlook expects continued growth, with oil use increasing by another 1.6 million bpd in the last decade of the forecast period. By 2045, OPEC anticipates there will be 2.6 billion vehicles on the world’s roads, a billion more than in 2022. Despite the rapid growth of electric vehicles, over 72% of these vehicles are expected to be powered by combustion engines.

OPEC and its allies, known as OPEC+, have once again reduced oil supply to support the market. The report suggests that OPEC’s total share of the oil market will rise to 40% in 2045 from 34% in 2022 as non-OPEC output begins to decline in the early 2030s.

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