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World demand in 2028 will reach 110.2 million bpd, OPEC said, up from 102 million bpd in 2023. Image Credit: REUTERS

Dubai: OPEC raised its world oil demand forecasts for the medium and long term in an annual outlook, and said $14 trillion of investment is needed to meet this demand even as renewable fuel use grows and more electric cars take to the road.

The view from the Organization of the Petroleum Exporting Countries, in its 2023 World Oil Outlook released on Monday, contrasts with that of other forecasters, including the International Energy Agency (IEA), that say demand might peak this decade.

The group says oil should be part of the energy transition, and it cited decisions by some governments and companies to slow their retreat from fossil fuels.

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“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,” OPEC Secretary General Haitham Al Ghais wrote in the foreword to the report.

“Calls to stop investments in new oil projects are misguided and could lead to energy and economic chaos,” he added, putting the required oil sector investment at $14 trillion out to 2045, up from $12.1 trillion estimated last year.

OPEC expects world oil demand to reach 116 million barrels a day (bpd) by 2045, around 6 million bpd higher than expected in last year’s report, with growth led by China, India, other Asian nations, and Africa and the Middle East.

Net zero pushback

Speaking at the publication’s launch in Riyadh, the capital of top OPEC producer Saudi Arabia, OPEC’s Al Ghais cited pushback against net zero policies, and said climate action should not come at the cost of global energy security.

“Over the past year what is clear is that we have seen populations voice concerns about the costs and actual benefits of net zero targets,” he said.

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“There are some who unfortunately continue to push the extremely risky narrative of dismissing oil with talk of oil demand dropping by almost 25 million barrels a day by 2030,” Al Ghais said.

In the report, OPEC also raised its demand forecasts for the medium term to 2028, citing robust demand this year despite economic headwinds such as interest rate hikes.

World demand in 2028 will reach 110.2 million bpd, OPEC said, up from 102 million bpd in 2023. It predicted oil use in 2027 would reach 109 million bpd, up from 106.9 million bpd estimated in 2022.

In 2020, OPEC made a shift when the pandemic hit oil demand, saying consumption would eventually slow after years of predicting ever-increasing use. After that it started raising forecasts again as oil use recovered.

While the 2022 version of OPEC’s report anticipated global demand reaching a plateau after 2035, the latest sees oil use rising by another 1.6 million bpd in the last 10 years of the forecast period. OPEC now expects demand to be higher than it thought in 2019, before the pandemic.

By 2045, there will be 2.6 billion vehicles on the world’s roads, a billion more than in 2022, OPEC forecast. Over 72 per cent of them will be powered by a combustion engine despite electric vehicles being the fastest-growing segment, the report said.

OPEC and its allies, known as OPEC+, are again cutting supply to support crude prices. The report sees OPEC’s total share of the oil market rising to 40 per cent in 2045 from 34 per cent in 2022 as non-OPEC output starts declining from the early 2030s.