Oil prices lost almost $20 (Dh73.46) a barrel inside a month and as I said in my last column, “The declining level of prices and the renewed oil stocks build in the consuming countries may force Opec and associate producers in the Declaration of Cooperation to reconsider their options in reintroducing control over oil production”.

Judging by current statements and a flurry on diplomacy, this may be coming faster than I thought and it could happen on December 6, when Opec and associate producers are to meet. At such an uncertain time in the oil market, it is more appropriate to think of the long term as the International Energy Agency (IEA) has just published its annual “World Energy Outlook” (WEO).

The report is voluminous and covers all sources of energy, that it is difficult to comment on in one column. So what are the prospects for oil especially as competition among energy sources is intensifying?

The report discusses three scenarios with an obvious, though undeclared, preference for the New Policies Scenario, where current and evolving changes in government policies are taken into consideration. In this scenario, world oil demand grows by around 1 million barrels per day (mbd) on average each year to 2025, and then the average falls to around 0.25 mbd to 2040.

In absolute numbers, demand in 2040 is expected at almost 111 mbd, more or less the same as in last year’s report. Contrary to some views, the IEA says that “global demand does not peak before 2040”.

The growth in oil demand will be from developing countries, but “demand in advanced economies drops by over 0.4 mbd on average each year to 2040”. Oil producers are already aware of this as they gear their marketing strategies and investment towards the East.

But the IEA warns that “oil use in cars peaks in the mid-2020s”, and that in 2040 there would be 300 million electric cars out of a global car fleet of 2 billion. Oil demand will in fact be affected more by efficiency measures of the non-electric car fleet as stipulated by current trends and regulations.

The growth in oil demand would come from use in trucks and other means of transportation as well as in petrochemicals.

On the supply side, the IEA warns the level of conventional crude oil approved for development is far below that needed to meet demand growth in the New Policies Scenario. And that “there is a real prospect of damaging price spikes and increased price volatility”. To avoid this, producers must be assured of the security of demand just as consumers must be of the security of supply.

While US production will continue to increase substantially to 2025, “members of Opec are central to meeting oil demand growth” to 2040.

The price assumption for this scenario is interesting. While the average IEA import price was $52 a barrel in 2017, it assumes a price trajectory of $88 and $112 a barrel in 2025 and 2040, respectively, in 2017 dollars. Therefore the nominal price would be even higher. Given that the price a month ago was more than $86 a barrel there should be no surprise in these projections.

The IEA says, “If there is no change in policies from today, as in the Current Policies Scenario, this leads to increasing strains on almost all aspects of energy security”. Oil demand is then expected at a much higher level of just over 124 mbd in 2040 and Opec production close to 55 mbd.

In contrast, the IEA projects its Sustainable Development Scenario where the world would meet all its objectives on climate change targets, accelerated clean energy products and universal access to energy services.

In this scenario, fossil fuels would suffer an unimaginable loss of marketshare. Demand would only be around 70 mbd, or a loss of some 30 mbd from today’s level. The price in 2040 would be $64 a barrel.

I dare say that it is unrealistic judging by the progress made over the last 30 years on these objectives, especially with the most crucial climate change targets. To me it sounds like the thought of the Bab Al Agha bread in Baghdad, which is said to be fresh, crispy and inexpensive and therefore does not exist.

Let us stick to some degree of realism without forgetting reasonable aspirations.