Opec trims oil demand for next four years

THE Organization of the Petroleum Exporting Countries (Opec) cut its global oil demand forecasts for the next four years on Thursday (Jul 10) as Chinese growth slows.

This came even as the organisation lifted its longer-term view due to rising oil needs in the developing world; it also said there was no evidence that demand had reached its peak.

World demand will average 105 million barrels per day (bpd) this year, Opec said in its 2025 World Oil Outlook published on Thursday.

“Oil underpins the global economy and is central to our daily lives,” said the organisation’s secretary-general Haitham Al Ghais in the foreword to the report. “There is no peak oil demand on the horizon.”

Still, Opec’s forecasts for demand in 2026 through 2029 are lower than last year. It expects an average demand of 106.3 million bpd in 2026, down from 108 million bpd seen last year. For 2029, the forecast of 111.6 million bpd is down 700,000 bpd from last year’s figure.

At the same time, Opec expects demand to grow for a longer period than other forecasters, including BP and the International Energy Agency (IEA), which expect oil use to peak this decade.

The Opec+ producer group, comprising Opec countries and allies such as Russia, is pumping more barrels to regain market share after years of cuts to support the market. Lower medium-term demand could make it harder for the group to unwind its other cuts, which remain in place until the end of 2026.

Opec said demand had completed its recovery from the Covid-19 pandemic, resulting in a more predictable outlook.

It also said that growth is slowing in China, which has driven oil use higher for the last few decades. “This comes on the back of slower economic growth, the faster penetration of EVs (electric vehicles) and related charging infrastructure and continued oil substitution in several sectors,” it added.

Gap with IEA

Opec kept its forecast that demand in 2030 will average 113.3 million bpd, unchanged from last year.

By contrast, the IEA expects global demand to peak at 105.6 million bpd by 2029, then fall slightly in 2030, the adviser to industrialised countries said last month.

For the longer term, Opec expects India, the Middle East and Africa to drive growth. Developments such as the US’ exit from the United Nations climate pact and a slower EV penetration rate in Europe will probably have spillover effects into developing countries, which need more energy, Opec said.

The organisation expects world oil demand to reach 122.9 million bpd by 2050, up from 120.1 million bpd expected in last year’s report. That is far above other 2050 forecasts from the industry such as that of BP.

Opec has been calling for more oil industry investment and said the sector needs US$18.2 trillion to be spent to 2050, compared with US$17.4 trillion needed as estimated last year. REUTERS