OPEC has thrown the down the gauntlet to Paris-based climate group the International Energy Agency (IEA), predicting world oil demand will not plateau until 2035.
The world’s most influential oil cartel has hiked its forecasts for world oil demand over the medium and long term in its annual outlook, challenging suggestions from the IEA that fossil fuel usage will peak within three years.
It has also increased its predictions for required investment to meet oil demand to $12.1tn, which it argues is needed to meet this consumption requirements despite the energy transition to renewables.
The IEA and OPEC have an increasingly strained relationship, with OPEC ditching IEA from its calculations for oil demand amid concerns over its perceived Western bias earlier this year.
Meanwhile, IEA chief executive Fatih Birol has warned OPEC has risked pushing global markets into a recession following its swingeing 2m barrels per day cuts last month to drive up oil prices.
Another decade of oil demand growth would be a boost for OPEC and its 13 members, which has been arguing that oil should be part of the energy transition.
It has attributed persistent failures in boosting oil production to underinvestment, driven by a Western focus on economic, social and governance issues – which has created a funding shortfall.
In the report, OPEC Secretary General Haitham Al Ghais said: “Chronic underinvestment into the global oil industry in recent years, due to industry downturns, the COVID-19 pandemic, as well as policies centred on ending financing in fossil fuel projects, is a major cause of concern.”
Bullish OPEC forecast contrasts with rival
OPEC raised its demand forecasts for the medium term to 2027, up by almost 2m bpd by the end of the period from last year.
It expects oil demand will reach 103m barrels per day in 2023, up 2.7m barrels per day (bpd) from 2022 – up 1.4m bpd from last year’s prediction.
The cartel argued the upward revision reflects a more robust recovery now seen in 2022 and 2023 and a “strong focus on energy security issues.”
This has, in their view, led to a slower substitution of oil by other fuels such as natural gas, which has soared across major benchmarks following Russia’s invasion of Ukraine.
By 2030, OPEC sees world demand averaging 108.3m bpd, up from 2021, and lifted its 2045 figure to 109.8m bpd from 108.2 million bpd in 2021.
Alongside its hostilities with the IEA, the cartel is currently enduring frosty relations with the US.
President Joe Biden has warned the White House is rethinking its relationship with Saudi Arabia following last month’s oil cuts to drive up prices.
The West’s push to boost supplies this year has fallen on deaf ears with OPEC members struggling with capacity issues and concerned about supply gluts if demand drops.