KEY POINTS
- OPEC raises long-term oil demand forecast, predicting 120.1 million barrels per day by 2050.
- Demand growth driven by developing regions like India, Africa, and the Middle East.
- OPEC calls for $17.4 trillion in oil industry investments through 2050 to meet rising demand.
OPEC has increased its forecast for global oil demand over the medium and long term, attributing the rise to economic growth in developing regions like India, Africa, and the Middle East, and a slower transition to electric vehicles.
This outlook, presented in the 2024 World Oil Outlook report, predicts oil demand will continue growing well beyond the timeline expected by other forecasters.
Unlike projections from BP and the International Energy Agency (IEA), which anticipate a peak in oil demand this decade, OPEC expects oil consumption to keep rising. OPEC’s Secretary General, Haitham Al Ghais, stated that future energy demand will largely come from the developing world due to growing populations, a burgeoning middle class, and increased urbanization.
OPEC’s optimistic forecast
In the report, OPEC expects global oil demand to reach 118.9 million barrels per day (bpd) by 2045—an increase of 2.9 million bpd from last year’s forecast. Additionally, the report extends its timeline to 2050, forecasting demand will hit 120.1 million bpd by then. This is a significant contrast to BP’s projection that oil demand will peak in 2025 and drop to 75 million bpd by 2050.
OPEC also noted that electric vehicles, while gaining momentum, will still face challenges such as the limitations of electricity grids and access to essential minerals. The organization expects vehicles powered by internal combustion engines to represent more than 70 percent of the global fleet in 2050, even as electric vehicles increase their market share.
The forecast offers a more optimistic outlook for oil demand than other industry predictions, with Exxon Mobil forecasting demand to stay above 100 million bpd through 2050. According to Reuters, OPEC’s long-term demand growth aligns with its ongoing call for $17.4 trillion in oil industry investment through 2050.
Growing demand from developing economies
OPEC sees the bulk of future demand emerging from developing economies, particularly in regions with increasing urbanization and expanding middle-class populations. This forecast stands in contrast to the more ambitious clean energy goals set by several developed nations, which aim to transition away from fossil fuels.
“The developing world will be the primary driver of energy demand,” Al Ghais emphasized during the report’s launch in Brazil. He noted that OPEC members, who rely on oil revenues, are likely to benefit from a prolonged period of rising consumption.
However, the organization also acknowledges the growing pushback on ambitious clean energy targets, which some automakers have already begun scaling down.
Despite the transition to cleaner energy sources, OPEC’s report sees no peak in oil demand on the horizon. In fact, it forecasts that OPEC+ countries will increase their share of the oil market to 52 percent by 2050, up from 49 percent in 2023.
Challenges ahead
While OPEC remains optimistic about future oil demand, environmental groups and energy experts argue that the world must move faster toward renewable energy. Electric vehicle adoption, infrastructure development, and policies promoting cleaner energy will play a critical role in shaping the future energy landscape.
OPEC, however, believes that the transition to renewable energy will take longer than expected. In the report, it outlined the difficulties that remain for electric vehicles, particularly in terms of battery manufacturing, grid capacity, and access to essential minerals.
As the global energy market evolves, the balance between maintaining oil supply and meeting climate goals will continue to be a challenge for countries and industries around the world.
