OPEC says oil will continue to expand through 2050

by Grant Smith

OPEC reinforced its view — an outlier even within the petroleum industry — that global oil consumption will keep increasing to the middle of the century. 

Demand will grow by roughly 19% to reach almost 123 million barrels a day by 2050, the Organization of the Petroleum Exporting Countries said in a report Thursday. That’s about 3 million a day more than it predicted in September. India will lead the expansion, and US President Donald Trump’s decision to exit the Paris climate accord is supporting the outlook, it said.

“The US withdrawal from the Paris Agreement will impact climate change negotiations and would most likely result in higher demand for hydrocarbons in general, and oil and gas in particular,” OPEC said in its annual World Oil Outlook. “Continued, and even marginally higher, oil demand in the US is to be expected over the medium-term period.”

The cartel’s perspective is a fringe one. BP Plc, Bank of America Corp., the International Energy Agency and Wood Mackenzie are among many forecasters who believe demand will stop growing at some point in the next decade as top consumer China shows signs of peaking. Scientists have said the uninhibited burning of fossil fuels envisioned by OPEC would trigger environmental catastrophe.

Still, oil use has surpassed expectations in recent years as the transition to renewable energy proves challenging. And OPEC — led by Saudi Arabia — has shown it’s willing to defy consensus, boosting crude production in the past few months despite widespread predictions that demand won’t be strong enough to absorb it.

The market’s response to the revival of supply is giving the group some sense of vindication. Oil futures have ticked higher this week to trade near $70 a barrel in London, despite the cartel’s surprise decision on July 5 to bring back 548,000 barrels a day of idled supply in August — four times the initially scheduled amount.

Nonetheless, forecasts from OPEC’s Vienna-based secretariat have widely missed the mark in recent years.

It published an outlook for 2024 that was more bullish than the wider industry, only to end up slashing projections by 32% over the course of six consecutive monthly downgrades. In 2023, the group announced deeper output curbs while its data indicated a record inventory squeeze that never materialized.

OPEC’s researchers see global oil consumption rising roughly 9% from 2024 to 2030, unchanged from last year’s forecasts. Demand will continue to grow over the following two decades, driven by road transportation, petrochemicals and aviation, they said. India will account for the biggest share of growth, adding 8.2 million barrels a day to 2050.  

The OPEC+ alliance, which includes countries such as Russia and Kazakhstan, will expand its share of global oil markets to 52% in 2050 from around 48% this decade as growth from rivals falters, according to the report.

Copyright Bloomberg News