OPEC’s view that world oil demand will keep rising for longer than many other forecasters predict is not expected to change much in its forthcoming major report, despite the growing role of renewables and electric cars, two OPEC sources said.
The Organization of the Petroleum Exporting Countries is scheduled to update its long-term oil demand forecasts in its 2022 World Oil Outlook on Oct. 31. The 2021 version sees oil demand plateauing after 2035.
Another decade or more of oil demand growth would be a boost for producers and OPEC, whose 13 members depend on oil income, and would highlight the need for continued investment in new oil supplies. Consumers and governments urging efforts to curb oil use to combat climate change would be less happy.
OPEC made a shift in 2020 as the pandemic hit demand by saying it will eventually plateau, after having predicted years of ever-rising demand. The latest update is likely to keep OPEC among the more optimistic forecasters of oil demand.
“It is similar to last year in terms of the demand outlook,” one of the OPEC sources said.
Other predictions see oil demand peaking earlier. TotalEngergies for example has forecast this will take place before 2030.
The International Energy Agency on Thursday said demand for all fossil fuels was set to peak or plateau for the first time in the agency’s history of modelling, with oil demand levelling off in the middle of the next decade.
OPEC’s Vienna headquarters declined to answer questions ahead of the publication’s launch on Monday in Abu Dhabi that will be attended by OPEC Secretary General Haitham Al Ghais and other OPEC officials.
Another OPEC source said Russia’s invasion of Ukraine – which has sent oil and gas prices soaring and led to an energy crisis – could boost oil demand in the near term due to fuel switching, as could the ongoing recovery from the pandemic.
“It is expected that oil and gas will remain as the dominant fuels in the world’s energy mix until the middle of the century,” this source said.
Last year, OPEC saw oil demand reaching 108.2 million barrels per day in 2045, up from 90.6 million bpd in 2020.
The group has been lowering the 2045 projection for the last few years citing changes to consumer behaviour brought about by the pandemic and competition from electric cars.
Two former OPEC officials cited longer-term trends that will weigh on demand.
“Even oil-producing countries are interested in electrification because of pollution,” said Hasan Qabazard, OPEC’s head of research from 2006 to 2013, and a Kuwaiti. “In Kuwait, people are starting to buy electric cars.”
Qabazard last year said demand could peak within a decade but maybe later and hasn’t since changed his view.
A former OPEC minister said the longer-term implications of the Ukraine war could encourage the shift towards renewables.
“The war in Ukraine has changed Europe and the United States’ reliance on Russia’s oil and gas,” said Chakib Khelil, a former Algerian oil minister and OPEC president. “Europe will rely more and more on renewable energy in the future and less on oil and gas from Russia.”
He added that it was “highly probable” demand could plateau earlier than expected in the current OPEC forecast.