By Emem Ekanem
Despite mounting efforts from the International Energy Agency (IEA) to limit climate change, the Organization of the Petroleum Exporting Countries (OPEC) on Monday stated that it expects the demand for crude oil to continue to grow over the next two decades. The oil producer group said that it would require a whopping sum of fourteen Trillion dollars ($14Trn) in investment if it is to meet this upswing, especially amid a rapid expansion of renewable energy technologies.
The Organization of Petroleum Exporting Countries (OPEC)’s long-term outlook on global oil demand diverges from that of the International Energy Agency (IEA), the world’s leading energy watchdog. The OPEC and IEA, which are both big names in the energy industry, are currently locked in a war of words over peak oil demands.
It can be recalled that in a landmark report in 2021, the International Energy Agency (IEA) surprised the world and shocked the oil-exporting nations by calling for a halt in new investment in fossil fuel production to attain carbon neutrality by 2050. The IEA has repeatedly said that the pathway to net-zero emissions requires massive declines in the use of oil, gas, and coal and warned that there is no place for new fossil fuel projects if the world is to curb global heating to 1.5 degrees Celsius. According to the IEA, this temperature threshold is widely regarded as critical to avoiding the worst impacts of climate change. The burning of fossil fuels is the chief driver of the climate crisis.
In its 2023 annual report, the forecast of the Organization of the Petroleum Exporting Countries (OPEC), however, expects the demand for crude oil to reach 116 million barrels per day (mbd) by 2045 under its present state, which is a 16.5 per cent increase from the 99.4 million barrels per day (mbd) as recorded in 2022, and roughly 6 million more barrels per day (bpd) than what it predicted last year.
According to the Secretary General of the OPEC, Haitham Al-Ghais, oil demand has “the potential to be even higher.” The growth is likely to be fueled by India, China, other Asian countries, Africa, and the Middle East.
He emphasized in the forward to the report, stating that “what is clear is that the world will continue to need more energy in the decades to come. Recent developments have led the OPEC team to reassess just what each energy can deliver, with a focus on pragmatic and realistic options and solutions.” In criticism aimed at the International Energy Agency (IEA), Al-Ghais added that “calls to stop investments in new oil projects are misguided and could lead to energy and economic chaos.”
In order for its long-term oil demand forecast to be met, the Organization for Petroleum Exporting Countries (OPEC) stated that investments in the oil sector (fossil fuel production) of fourteen trillion dollars ($14Trn), or around six hundred and ten billion dollars ($610Bn) on an average per year, would be needed. The group said it is “vital” that these investments are delivered, adding that it is beneficial to both producers and consumers.
In the medium term, the Organization for Petroleum Exporting Countries (OPEC) mentioned that global oil demand was likely to reach a level of a hundred and ten point two million barrels per day (110.2 million bpd) in 2028, signifying a jump of ten point six million barrels per day (10.6 million bpd) in comparison to 2022 levels.
According to the Organization of the Petroleum Exporting Countries (OPEC) whose thirteen (13) member states include Saudi Arabia, the Gulf States, and Venezuela, oil demand will be driven by emerging and developing nations, with India in the lead position. Meanwhile, it sees oil demand in the Organization for Economic Cooperation and Development (OECD) club of advanced economies declining from 2025.
The Organization for Petroleum Exporting Countries (OPEC)’s outlook is starkly in contrast with the forecast of the International Energy Agency (IEA), which had last month stated that the world was now at the “beginning of the end” of the fossil fuel era.
This forecast of the OPEC comes just eight (8) weeks before the next UN climate conference, COP28, in Dubai. At the conference, dozens of countries will try to impose the adoption of the objective of an end to the use of fossil fuels like oil, natural gas, and coal.
