Opec reopens rift with IEA on peak demand

Opec today reopened a rift with the IEA about the future need for oil, calling the Paris-based agency's forecast for peak demand this decade a "continuation of [its] anti-oil narrative."

Opec secretary-general Haitham Al Ghais said the IEA's projection, made earlier this week, is a "dangerous narrative" that "will only lead to energy volatility on a potentially unprecedented scale." He made his case in a commentary for consultancy Energy Aspects that Opec made publicly available.

This is not the first time the two organisations have clashed over the future trajectory for oil demand growth. When IEA executive director Fatih Birol first floated the idea of a peak demand this decade in 2023, Al Ghais said this was "extremely risky and impractical".

Birol and the IEA have been keen to stress that there will be no sharp demand fall beyond its predicted peak year of 2029, and have repeatedly said there will be a gradual decline perhaps over as long as 20 years.

Al Ghais said Opec does not see peak oil demand by the end of the decade — he said in January that the scenario "is not showing up in any reliable and robust short- and medium-term forecasts" — and took issue with the IEA's forecasts for demand growth to 2030. The watchdog projects a sharp drop off in growth in 2026 to almost nothing in 2029 and a small contraction in 2030. Al Ghais called this unrealistic.

The two bodies' demand estimates have been moving further apart in recent months, with Opec's forecast for growth this year now 1.3mn b/d more than that of the IEA. Birol this week acknowledged this is a "big gap", but was diplomatic when pressed for reasons.

"We respect all institutions' forecasts," he said. "We will see at the end of the year what the numbers will be."

Criticism of the IEA from the upstream industry has magnified since 2021, when the agency said that 2050 climate goals exclude the need for any new oil and gas fields. Saudi oil minister Prince Abdulaziz bin Salman described this as "la la land" analysis. This year the IEA has come under fire from Republicans in the US Congress who have said the agency is veering into climate advocacy. US industry body API chief executive Mike Sommers said earlier this year the IEA "has become, unfortunately, so politicized that it's just not a reliable source of data any more."

By Ben Winkley