In its yearly assessment presented on Monday, OPEC increased its projections for the medium- and long-term global oil consumption and stated that $12.1 trillion in investments will be necessary to meet this demand amid the energy transition.
According to the Organization of the Petroleum Exporting Countries’ 2022 World Oil Outlook, oil consumption will peak before 2030 due to the expansion of renewable sources of energy and electric vehicles, in contradiction to other analysts’ predictions. The 13 OPEC members who rely on petroleum revenue, would benefit from another generation of rising oil consumption. The organization has been making the case that the energy transition should include oil and that capitalists’ attention to economic, social, and governance (ESG) concerns has made a lack of capital harsher.
“The overall investment number for the oil sector is $12.1 trillion out to 2045.”OPEC Secretary General Haitham Al Ghais
The COVID-19 epidemic, industrial recessions, legislation aimed at halting finance for fossil fuel projects, and ongoing underfunding into the international oil industry in recent years, however, are important factors to consider. When the epidemic affected demand in 2020, OPEC changed its tune and predicted that consumption would finally slow after years of expecting constant growth. The OPEC study upheld its belief that beyond 2035, global consumption will level.
Other forecasts from businesses and banks indicate an earlier peak in oil demand. For the first time in the agency’s history of modeling, the International Energy Agency stated on Thursday that demand for all fossil fuels was about to peak, with oil consumption leveling down in the middle of the next ten years. According to the analysis by ENERGY SECURITY DEMAND BOOST, global oil demand would increase by 2.7 million BPD from 2022 to reach 103 million barrels per day in 2023. The forecast for 2023 shows a 1.4 million BPD increase in the overall demand. According to OPEC, demand will be higher than expected by over 2 million BPD by the end of the projected period in 2027 compared to last year. According to the report, the upward modification is due to a stronger restoration now anticipated for 2022 and 2023 as well as a “strong focus on energy security issues” that will slow the replacement of oil by other fuel sources like natural gas, whose cost has increased as a result of Russia’s incursion of Ukraine. OPEC raised its 2045 estimate from 108.2 million BPD in 2021 to 109.8 million BPD in 2030, predicting that global consumption will average 108.3 million BPD, an increase from 2021. Over the previous few years, the panel has decreased the 2045 prediction. To boost the market, OPEC and its allies, referred to as OPEC+, are once more reducing production. According to the analysis, supply constraints will persist in the medium to long term, with OPEC output falling in 2027 compared to 2022 as non-OPEC supply increases. Despite this, OPEC is optimistic about its career potential as its market share grows. As opposed to about 2030 last year, the peak in the U.S. tight crude supply is anticipated to occur in the late 2020s. The research stated that oil
“is anticipated to remain the top fuel in the global primary energy mix.”ENERGY SECURITY DEMAND BOOST
Information from Reuters