Zhitong Finance learned that OPEC predicts 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 its annual long-term outlook report, by 2050, global oil consumption is expected to increase by 17.9 million barrels per day, reaching 0.1201 billion barrels per day, an increase of about 18%. Compared to last year's report, this means that OPEC has further raised its expectations for oil demand in the next 20 years.

Brent crude oil prices fell below $70 per barrel in early September - the lowest level in 33 months - a crucial development for OPEC+ as it heavily relies on oil revenue. The prospects are not optimistic for the Organization of the Petroleum Exporting Countries and its allies (OPEC+). Earlier this month, led by Saudi Arabia, OPEC decided to further delay the increase in oil production for two months to support oil prices, but so far there has been no impact. Lower global demand forecasts, combined with new oil supplies from non-OPEC countries, indicate that crude oil prices will remain low in the long term.

This has led some market participants to pose 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 predictions, this is a difficult question to answer.

OPEC's "World Oil Outlook 2024" report released on Tuesday predicts a strong 24% growth in global energy demand from now until 2050. It also forecasts that oil demand will experience a 'strong mid-term growth' by 2029, reaching 0.1123 billion barrels per day, an increase of 10.1 million barrels per day compared to 2023.

However, a considerable number of energy analysts seem to disagree with this calculation - especially analysts from the International Energy Agency (IEA). According to the IEA's June annual mid-term outlook, by the end of this decade, demand is expected to stabilize, dropping to around 0.106 billion barrels per day. The IEA still believes that global oil demand will rise, just with a smaller predicted increase, and is expected to peak by the end of this decade.

In recent years, the forecasting dispute between OPEC and the IEA has become well known, with the latter working towards future net-zero emissions.

Meanwhile, S&P Global Commodity Insights believes the mid-term outlook falls between the two, with demand peaking at 0.109 billion barrels per day by 2034, gradually decreasing to below 0.1 billion barrels per day by 2050. In comparison, OPEC forecasts that by 2050, oil demand will reach a staggering level of 0.12 billion barrels per day.

All parties agree that the demand in developing countries will decrease, while that in emerging markets, led by India, will rise.

Mid-term Outlook

As for the medium-term outlook, analysts hold a pessimistic view on oil demand and prices. Despite OPEC+ announcing in early September that the organization would extend crude oil production cuts until December to limit market supply.

Dave Ernsberger, Market Report Director at S&P Global Commodity Insights, said, "The extra couple of months has not convinced anyone skeptical of the market that this will make a big difference in supporting prices. So, this is the issue at hand. But the bigger question is, from an existential perspective, are we reaching the moment of peak oil demand?"

Ernsberger highlighted the growth of alternative forms of energy, including the increasing use of biofuels in the shipping industry. Ernsberger stated, "We are entering a post-growth era. This is not a post-oil era, but a post-growth era. How will OPEC+ readjust to fit into a world of overall low growth or zero growth in demand?"

As the world's largest importer of crude oil products, China has embarked on a dedicated path to electrification, which has dimmed the prospects of rising oil prices.

Scholar Li-Chen Sim from the Middle East Institute, based in Washington, said: "The biggest threat to the rise in oil prices within OPEC+ comes from external factors, mainly subdued demand, the oil supply from non-OPEC+ countries, and some member countries exceeding their production quotas." He stated that estimates from international and Chinese sources indicate a slowdown in China's demand for oil and petroleum products.

Sim added: "The reduction in oil consumption has structural factors driven by a conscious effort to reduce heavy dependence on oil (and natural gas) imports, reflected in policies promoting the adoption of electric vehicles and the expansion of renewable energy and nuclear energy."

In the short term, OPEC+ is expected to resume some production in December, with several countries in the alliance exceeding their quotas. Non-OPEC+ producing countries such as the USA, Guyana, Brazil, and Canada will have more supply entering the market. Ernsberger stated: "As long as the threat of supply recovery exists in the market, it will be difficult for oil prices to rise significantly from current levels."

Many analysts believe that from a longer-term perspective, the ultimate decline of the oil era - if it does happen - will be due to changes in demand rather than a reduction in supply.

The late Saudi former Minister of Petroleum and Mineral Resources, Ahmed Zaki Yamani, once said in 2000: "The end of the Stone Age was not because of a lack of stones, the oil age will end, but not because of a lack of oil."