One of the main points of consensus around global oil demand growth is that it is expected to remain robust, driven by a combination of factors, including economic recovery, increased travel and growing industrial activity in non-OECD countries.
The only major body not seeing continued massive growth is the International Energy Agency (IEA), which this week revised its numbers to forecast that oil demand will rise by just 1 million barrels per day (bpd) next year and will (finally! ) peak “toward the end of this decade” at 106 million bpd, up from 102 million currently. The IEA expects this growth to be led by non-OECD countries, particularly China and India. The IEA and others have highlighted the importance of these regions in driving global oil demand.
The IEA, which is funded by 31 industrialized nations through a fee structure, says it believes demand growth from India, China and other countries will gradually be outweighed by the expected adoption of electric vehicles and other green technologies. However, it should be noted that the agency has long been shifting from an analytical organization to essentially an environmental campaign, and its forecasts today are as much an attempt to influence markets as they are to actually predict them.
Unlike the IEA, the US Energy Information Administration (EIA) raised its forecast for global oil demand growth for 2024 to 1.1 million bpd, up from a previous estimate of 900,000 bpd. This revision is based on expectations for travel and tourism in the second half of the year. The EIA projects even stronger demand growth of 1.5 mbpd for 2025, again at odds with the IEA, which sees just 1 mbpd that year, with most of the growth coming from non-OECD countries. The US Federal Reserve also raised its projection that oil prices will rise to an average of $87/bbl in Q4 2024 on the back of rising demand.
Goldman Sachs has an even more optimistic view of the market, expecting global oil demand to grow by 1.25 million barrels per day in 2024. The bank cites strong growth in jet fuel, petrochemical LPG and diesel and demand for petrol and diesel as key drivers. this growth. Goldman analysts expect strong fuel demand to lead to average oil prices in the second half of the year of $86.
The Organization of the Petroleum Exporting Countries (OPEC) stuck firmly to the most optimistic outlook for demand growth, again refusing to revise its original forecast of growth of 2.25 mbpd for 2024. OPEC also expects strong growth in global oil demand in 2025, with a projected increase of 1.85 mbpd. The organization noted that the OECD is expected to grow by 0.1 mbpd, while demand in non-OECD countries is expected to increase by 1.7 mbpd.
“Globally, the services sector is maintaining a steady pace,” OPEC said. “It is expected to be a major contributor to economic growth dynamics in the second half of 2024, particularly supported by travel and tourism, with a subsequent positive impact on oil demand.
The cartel also reaffirmed its previous projections of strong global economic growth of 2.8 percent in 2024 and 2.9 percent in 2025. “A shift towards more accommodative monetary policy by major central banks is expected in 2H24 and throughout 2025 , particularly in the US, Eurozone and UK, which may also support global growth in the near term,” it said.
Readers will not need to point out that OPEC has the same problem as the IEA, but in the opposite direction. The EIA and Goldman Sachs forecasts are probably the most credible.
While growth projections vary significantly between these various entities, there is an overarching consensus even from the IEA for strong global oil demand growth in 2024/25 based largely on rising demand from developing countries in the Global South, along with relatively strong overall economic conditions. grow. All four forecasts also largely agree on the outlook for robust, rising oil prices in the second half of 2024.
It should be noted here that the continued strong demand for oil is accompanied by similar strong growth in demand for natural gas, coal and even wood in the energy sector. With all of these forms of carbon-intensive fuels seeing record or near-record demand in 2023, they are all likely to set new records for 2024 and possibly 2025 as well.
In other words, the human race is using more carbon-intensive fuels than ever before and will continue to use more in the future. The vaunted “energy transition” is simply not happening.
Net zero carbon by 2050 is for all intents and purposes dead.
David Blackmon has had a 40-year career in the US energy industry, of which the last 23 years have been spent in the public policy arena managing regulatory and legislative affairs for various companies. He continues to write and podcast on energy issues