Opec sees oil demand growing to 2050

Opec has again revised up its long-term global oil demand growth forecasts, doubling down on its position that oil and gas are here to stay for the foreseeable future.

"There is no peak oil on the horizon," Opec secretary general Haitham al-Ghais said in the organisation's latest World Oil Outlook (WOO) released today. "The fantasy of phasing out oil and gas bears no relation to fact."

This echoes remarks made earlier this year by state-controlled Saudi Aramco's chief executive Amin Nasser, flies in the face of some countries' moves towards carbon neutrality and keeps Opec at odds with the IEA, which recently said oil demand will peak at 105.6mn b/d in 2029, and gradually decline from the 2030s.

"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, economically competitive, acceptable to consumers and with the right infrastructure in place," al Ghais said.

Opec sees global demand for oil continuing to grow for at least the next two and a half decades, reaching 120mn b/d by 2050, from 102.2mn b/d in 2023, "with the potential for it to be higher." This is the first edition of the WOO to include forecasts through to 2050.

By 2045, Opec sees oil demand at 118.9mn b/d, higher by almost 3mn b/d compared with last year's report and by more than 9mn b/d from the 2022 WOO. The latest report has revised up oil demand projections for 2030, 2035 and 2040 by 1.3mn b/d, 2mn b/d and 2.4mn b/d, respectively.

The growth in oil demand to 2050 will predominantly come from outside the OECD, according to the Opec forecasts. OECD oil demand will grow only marginally to 45.9mn b/d by 2030 from 45.7mn b/d in 2023, but then begin to shrink steadily after and reach 35.6mn b/d by 2050, marking a 10.1mn b/d contraction over the 27 year forecast period.

In contrast, non-OECD growth looks set to grow strongly over the forecast period, reaching 84.6mn b/d by 2050, from 56.6mn b/d in 2023, with around 75pc of that growth in the first 17 years to 2040.

India will account for 8mn b/d of growth, or close to 30pc of the non-OECD total, with China contributing just 2.5mn b/d. The latter is affected by more modest medium-term economic growth, a transition towards services and a continued push towards electric vehicles.

Keep on spending

Opec again underlined the need to keep investing in order to reliably meet this expected oil demand growth.

It said $17.5 trillion are required between this year and 2050, or around $640 bn/yr on average, of which $14.2 trillion, or 81pc, will need to be directed towards the upstream.

Investment permitting, Opec sees global liquids supply rising to 113.5mn b/d by 2030, 119mn b/d by 2045 and 120.2mn b/d by 2050, from 102mn b/d in 2023. Around 70pc of this 18.2mn b/d increase is forecast to come from countries that today make up the Opec+ alliance, which should help lift its share of global supply to 52pc by 2050, from 49pc in 2023.

Supply from outside the Opec+ group is forecast to rise dramatically to 59mn b/d by 2030, from 51.7mn b/d in 2023, but then begin to fall gradually from the early 2030s to 57.3mn b/d by 2050, primarily due to declining US production. Opec sees US output peaking at around 23mn b/d in 2030, before plateauing and declining slowly to 19.4mn b/d by 2050.

By Nader Itayim