OPEC is highly optimistic about long-term oil demand, while the IEA is singing a different tune.

OPEC predicts that oil demand will continue to grow until 2050. The Organization of the Petroleum Exporting Countries (OPEC) has increased its optimistic expectations for demand, insisting that global oil demand will continue to rise until the middle of this century. According to OPEC's annual long-term outlook report, global oil consumption is expected to increase by 17.9 million barrels per day by 2050, reaching 120.1 million barrels per day, an increase of approximately 18%. Compared to last year's report, this means that OPEC has further raised its expectations for oil demand in the next 20 years. In early September, Brent crude oil prices fell below $70 per barrel - the lowest level in 33 months - which is not favorable for OPEC, whose oil income is crucial. Earlier this month, OPEC led by Saudi Arabia decided to delay the increase in oil production by two months in order to support oil prices, but so far it has had no effect. Lower global demand forecasts, along with new oil supply from non-OPEC countries, mean that crude oil prices will remain low in the long term. This has led some market participants to raise the question: Have we officially reached "peak oil"? Has demand growth already peaked, or is it just starting to decline from here? According to OPEC's own forecasts, this is a difficult question to answer. OPEC's "World Oil Outlook 2024" report released on Tuesday predicts that global energy demand will grow strongly by 24% from now until 2050. It also forecasts that oil demand will have "robust mid-term growth" in 2029, reaching 112.3 million barrels per day, an increase of 10.1 million barrels per day from 2023. However, many energy analysts seem to disagree with this calculation, especially analysts from the International Energy Agency (IEA). According to IEA's annual mid-term outlook released in June, demand is expected to stabilize at around 106 million barrels per day by the end of this decade. IEA still believes that global oil demand will rise, but predicts a smaller increase and expects it to peak by the end of this decade. In recent years, the ongoing disagreement between OPEC and IEA over forecasts has been well known, with the latter working towards achieving net zero emissions in the future. Meanwhile, S&P Global Commodity Insights believes that the medium-term outlook is somewhere in between, with demand peaking in 2034 at 109 million barrels per day and gradually declining to below 100 million barrels per day by 2050. In contrast, OPEC predicts that oil demand will reach a staggering level of 120 million barrels per day by 2050. All parties agree that demand in developing countries will decline, while demand in emerging markets led by India will rise. Medium-term outlook As for the medium-term outlook, analysts have a pessimistic view on oil demand and prices. Although OPEC+ announced in early September that the organization will extend its oil production cuts until December to limit market supply. Dave Ernsberger, Managing Director of Market Reports at S&P Global Commodities Insights, said: "The additional two months have not convinced anyone skeptical of the market that this will have a significant impact on supporting prices. So that's the immediate problem. But the bigger question is, from an existential perspective, are we approaching the moment of peak oil demand?" Ernsberger pointed out the growth of alternative forms of energy, including the increasing use of biofuels in the shipping industry. Ernsberger said: "We are entering a post-demand growth era. This is not the post-oil era, but the post-growth era. How will OPEC+ readjust to fit into a world of low or zero demand growth?" As the world's largest importer of oil, China has embarked on a specialized path towards electrification, dampening prospects for an increase in oil prices. Li-Chen Sim, a scholar at the Middle East Institute in Washington, said: "The biggest threat to OPEC+ of rising oil prices comes from external factors, such as weak demand, oil supply from non-OPEC+ countries, and some member countries within the organization exceeding their production quotas." He said estimates from international and Chinese sources show that China's demand for oil and petroleum products is slowing down. Sim added: "Reducing oil consumption is driven by structural factors, namely conscious efforts to reduce high dependence on oil (and gas) imports, and is reflected in policies promoting the adoption of electric vehicles and expanding renewable energy and nuclear energy." In the short term, OPEC+ is expected to restore some production in December, as several countries in the alliance have exceeded their quotas, and non-OPEC+ producing countries such as the United States, Guyana, Brazil, and Canada will have more supply entering the market. Ernsberger said: "As long as there is a threat of supply restoration in the market, it will be difficult for oil prices to rise significantly from current levels." Many analysts believe that the eventual decline of the oil era - if it does happen - will be due to changes in demand, rather than a decrease in supply. The late Saudi Minister of Petroleum and Mineral Resources, Ahmed Zaki Yamani, once said in 2000: "The Stone Age did not end because of a lack of stones, and the Oil Age will come to an end, but not because of a lack of oil."