OPEC raises its forecast for long-term oil demand

The Organization of the Petroleum Exporting Countries (OPEC) raised its forecast for global oil demand in the medium and long term in an annual forecast, saying $14 trillion in investments are needed to meet that demand even as the use of renewable fuels increases and more electric cars appear on the road.

The view in OPEC’s oil forecasts for 2023 issued on Monday conflicts with the expectations of others, including the International Energy Agency, which believes that demand is likely to reach its peak this decade.

A continued rise in consumption for another decade or more would provide a boost to OPEC, whose 13 members depend primarily on their income from oil. The group says oil should be part of the energy transition, pointing to decisions taken by some governments and companies to slow down the transition from fossil fuels.

“Recent developments have prompted the OPEC team to re-evaluate what (each type of) energy can achieve, with a focus on practical and realistic options and solutions,” OPEC Secretary-General Haitham Al-Ghais wrote in the introduction to the report.

He added, “Calls demanding a halt to investment in new oil projects are misleading and could lead to chaos in the energy and economic sectors.”

Al-Ghais estimated the volume of investments required in the oil sector at about $14 trillion until 2045, up from the $12.1 trillion estimated last year.

OPEC expects global demand for oil to reach 116 million barrels per day by 2045, about six million barrels per day higher than what was expected in last year’s report, while China, India, other Asian countries, and countries from Africa and the Middle East will lead this increase.

Fatih Birol, Executive Director of the International Energy Agency, said last week that global consumption of coal, oil and natural gas may reach its peak before 2030. The International Energy Agency provides advice to industrialized countries.