OPEC adds 2mn b/d to its 2025 oil demand forecast

OPEC adds 2mn b/d to its 2025 oil demand forecast
# 31 October 2022 17:27 (UTC +04:00)

Opec has raised its projection for global oil demand over the next few years to reflect "surprisingly robust growth in 2022 and 2023" and a slower oil-to-gas shift than previously forecast, APA-Economics reports.

In the group's latest World Oil Outlook (WOO), global oil demand climbs to 105.5mn b/d in 2025 from 96.9mn b/d in 2021, whereas last year's WOO pegged demand at 103.6mn b/d in 2025. The upwards revision is partly down to "a strong focus on energy security issues leading to slower oil substitution — especially by natural gas — compared to past outlooks", Opec said.

The new report sees demand rising to 106.9mn b/d in 2027, with around 85pc of the 10mn b/d of growth in 2022-27 coming from non-OECD countries and much of that in the next couple of years.

Opec expects the pace of oil demand growth to slow down markedly in the longer term, with an average increase of just 200,000 b/d each year in 2030-35 and after that "a relatively long period of plateauing". It forecasts global demand at 108.3mn b/d in 2030, 109.5mn b/d in 2035, 109.8mn b/d in 2040 and 109.8mn b/d in 2045.

The regional variations within the outlook are stark. OECD oil demand grows this year and next before flat-lining in 2024 and steadily declining over the rest of the forecast period, leaving 2045 consumption 10.7mn b/d lower than in 2021. The main reasons are efficiency improvements and the substitution of oil by gas and renewable energy.

"This includes the significant penetration of EVs [electric vehicles] in the road transportation sector, ongoing electrification of residential and industrial sectors, and the penetration of alternative fuels in the marine and aviation sectors," Opec said.

In contrast, non-OECD demand rises by 23.6mn b/d over the period, driven by an expanding middle class, high population growth rates and stronger economic growth potential. The rise is led by China in the first few years of the forecast period, but the pace of Chinese growth decelerates after 2025 and even turns to a marginal decline in the last five years of the forecast period, when India takes over as the leading driver of non-OECD demand growth. Opec forecasts Indian demand to be 6.3mn b/d higher in 2045 than in 2021, whereas Chinese demand is only 3mn b/d higher.

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