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Oil market crisis before 2030? IEA sees collapse, OPEC expects boom!

Published 14/06/2024, 13:31
© Reuters.

Investing.com - The future of global oil demand is currently a hotly debated topic, dividing experts and industry leaders alike. While the International Energy Agency (IEA) forecasts the imminent peak in oil demand before 2030 in its latest report "Oil 2024", the Organisation of the Petroleum Exporting Countries (OPEC) vehemently disagrees with this assessment. This conflict of forecasts has the potential to have far-reaching consequences for the energy sector and the global economy.

The IEA's forecast: an imminent end to growth

The IEA argues that global demand for oil will peak in the coming years, driven by the transition to cleaner energies and structural changes in the global economy. According to the IEA, demand for oil, which stood at just over 102 million barrels per day in 2023, will stabilise at around 106 million barrels per day by the end of the decade. The agency anticipates an oil market characterised by growing production capacity, particularly in the USA and other non-OPEC countries, which will lead to a significant oversupply.

This is a scenario that OPEC does not like at all, as it favours falling prices and declining investment.

OPEC's response: a realistic view of growing demand

It is therefore not surprising that OPEC's position is in stark contrast to this. Secretary General Haitham Al Ghais criticises the IEA's forecast as dangerous and unrealistic. "The peak in demand for oil is not in sight," says Al Ghais, emphasising that all previous predictions about the peak in demand have been wrong. He points to the example of petrol demand, which reached a record level in 2023 despite forecasts to the contrary.

Al Ghais goes on to argue that the IEA's narrative ignores real needs and trends. "Billions of people still do not have access to energy, while oil demand continues to rise," he writes. He warns that the proliferation of such scenarios could lead to energy volatility on a potentially unprecedented scale, destabilising both consumers and global markets.

Sustainability vs. realism

The IEA is in favour of an accelerated energy transition to achieve climate targets and ensure long-term sustainability. Its forecasts are based on assumptions about rapid progress in electric vehicles, improved fuel efficiency and a decline in oil consumption in electricity generation.

OPEC, on the other hand, emphasises the need for sufficient, reliable and affordable energy supplies. Al Ghais argues that the demands for a rapid energy transition and the simultaneous securing of energy supplies cannot be decoupled. He criticises the IEA for promoting an "anti-oil" narrative that ignores the economic realities of many countries.

The consequences: Uncertainty and volatility

This fundamental difference in perspective is likely to have significant consequences for global oil markets and energy policy. The IEA warns of oversupply and possible price cuts, while OPEC points to rising demand and potential supply shortages. The uncertainty created by these conflicting forecasts should lead to increased volatility on the energy markets, posing major challenges for both producers and consumers.

In a world torn between the pursuit of sustainable energy and the need for a stable energy supply, the question of which path is the right one remains unanswered. The future of oil demand is uncertain and the world will be watching closely to see how this controversy develops in the coming years.

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