Opec boosts long-term oil demand outlook, driven by developing world growth

Organisation publishes outlook forecasting oil use to increase, against predictions by BP and IEA

A ship is moored near storage tanks at an oil refinery off the coast of Singapore. Reuters

Opec raised its forecasts for world oil demand for the medium and long term in an annual outlook, citing growth led by India, Africa and the Middle East, and a slower shift to electric vehicles and cleaner fuels.

The Organisation of Petroleum Exporting Countries, in its 2024 World Oil Outlook published on Tuesday, sees demand growing for a longer period than other forecasters such as BP and the International Energy Agency, which expect oil use to peak this decade.

“Future energy demand is found in the developing world due to increasing populations, middle class and urbanisation,” said Opec Secretary General Haitham Al Ghais during the report's launch in Brazil, a country with which the group is seeking to form closer ties.

Mr Al Ghais's speech in Rio de Janeiro was briefly disturbed by a protester from Greenpeace.

A longer period of rising consumption would be a boost for Opec, whose 12 members depend on oil income. Opec said it expected more opposition to “ambitious” clean energy targets, and cited plans by several global car makers to scale down electrification goals.

“There is no peak oil demand on the horizon,” Mr Al Ghais wrote in the foreword to the report.

“Over the past year, there has been further recognition that the world can only phase in new energy sources at scale when they are genuinely ready.”

Opec expects world oil demand to reach 118.9 million barrels per day by 2045, about 2.9 million bpd higher than expected in last year's report. The report detailed its timeline to 2050 and expects demand to hit 120.1 million bpd by then.

That is far above other 2050 forecasts from the industry. BP projects oil use will peak in 2025 and decline to 75 million bpd in 2050. ExxonMobil expects oil demand to stay above 100 million bpd until 2050, similar to today's level.

Opec has been calling for more oil industry investment and said the sector needs $17.4 trillion to be spent to 2050, compared with $14 trillion needed by 2045, estimated last year.

“All policymakers and stakeholders need to work together to ensure a long-term, investment-friendly climate,” Mr Al Ghais wrote.

Opec also raised its medium-term demand forecasts, citing a stronger economic backdrop than last year as inflation pressure wanes and central banks start to lower interest rates.

World demand in 2028 will reach 111 million bpd, Opec said, and 112.3 million bpd in 2029. The 2028 figure is up 800,000 bpd from last year's prediction.

Opec's 2029 forecast is more than 6 million bpd higher than that of the IEA, which in June said demand will plateau in 2029 at 105.6 million bpd. The gap is larger than the combined output of Opec members Kuwait and the UAE.

In 2020, Opec made a shift when the pandemic hit oil demand, saying consumption would plateau in the late 2030s. It has begun raising forecasts again as oil use has recovered.

By 2050, there will be 2.9 billion vehicles on the road, up 1.2 billion from 2023, Opec forecast. Despite electric vehicle growth, those powered by a combustion engine will account for more than 70 per cent of the global fleet in 2050, the report said.

“Electric vehicles are poised for a larger market share but obstacles remain, such as electricity grids, battery manufacturing capacity and access to critical minerals,” it said.

Opec and its allies, known as Opec+, are cutting supply to support the market.

The report sees Opec+'s share of the oil market rising to 52 per cent in 2050 from 49 per cent in 2023, as US output peaks in 2030 and non-Opec+ output does so in the early 2030s.