VIENNA: Opec sees global oil demand plateauing by the mid-2030s, but crude will remain the biggest component of the international energy mix until 2045, as the world’s population increases and the global economy more than doubles in size to $270 trillion.
Global oil demand is forecast to rise by 17.6 million bpd in two-and-a-half decades, growing to 108.2 million bpd in 2045 from 90.6 million bpd in 2020, Opec said in its World Oil Outlook 2021 report on Tuesday, report agencies.
Annual oil demand growth will average 2.6 million bpd during the first five years of Opec’s forecast period, which will slow during the second five-year period to 0.6 million bpd, and further decelerate to 0.3 million bpd during 2030–2035 period. “After that, projections indicate a plateauing of oil demand at the global level,” the Vienna-based organisation said.
Oil demand is set to grow in countries outside the Organisation for Economic Co-operation and Development. An expanding middle class and stronger economic growth potential will drive oil demand in non-OECD countries by 25.5 million bpd to reach 74.1 million bpd in 2045.
In OECD countries, demand is estimated to peak at about 46.6 million bpd before it starts a longer-term decline towards 34 million bpd level by 2045.
In the medium term, Opec sees demand for crude jumping to 104.4 million bpd by 2026, increasing an estimated 13.8 million bpd. However, almost 80 per cent of this demand will materialise in the 2021-2023 period, as the world recovers from the Covid-19 pandemic.
Oil demand is bouncing back as the global economy continues to recover from the pandemic-driven slowdown that disrupted world trade last year and severely affected the aviation and tourism sectors. The world economy, which tipped into a deep recession in 2020, is expected to expand 6 per cent this year, according to the International Monetary Fund.
“Energy and oil demand have picked up significantly in 2021 after the massive drop in 2020 and continued expansion is forecast for the longer term,” said Mohammad Barkindo, Opec’s secretary general.
“While this year has not been without its challenges, we have not revisited the rollercoaster ride of 2020.”
Oil prices, which slumped last year amid declining demand, have also rebounded to hover around $75 per barrel range and topped $80 per barrel level on Tuesday as supply tightened and demand rose.
The Opec+ group of producers, led by Saudi Arabia and Russia, is bringing 2 million bpd back to the markets by the end of this year. It is set to decide whether to bring an additional 400,000 bpd of supply in October.
However, producers are struggling to meet production targets, said Naeem Aslam, chief market analyst at AvaTrade.