OPEC’s annual report on long-term energy trends reveals the pressing need for trillions of dollars to be invested in fossil fuel exploration and development over the next two decades. In order to support the increasing demand for energy, the oil industry must invest approximately $14 trillion by 2045, which is around $2 trillion more than previously estimated by OPEC in 2022. These investments are crucial for ensuring energy security amidst robust economic and population growth in the coming years.
Growing Demand for Oil
According to OPEC’s World Oil Outlook, under the base-case scenario, global oil demand is projected to reach 106.1 million barrels per day by 2025, compared to 99.6 million barrels per day in 2022. This represents an increase of 600,000 barrels per day since OPEC’s forecast last year. By 2045, demand is expected to rise further to 116 million barrels per day.
Alternative Scenarios
OPEC also highlights two alternative scenarios that could impact oil demand. In one scenario, a more rapid adoption of renewable energy sources could significantly reduce the need for oil. Conversely, another scenario envisions a retreat in global efforts to reduce carbon emissions, which would stimulate economic growth and subsequently increase oil demand.
OPEC’s Influence in the Industry
As one of the few organizations that publish highly-regarded oil supply and demand forecasts, OPEC’s insights carry significant weight in the energy sector. Its membership includes many of the world’s largest oil producers, collectively responsible for producing one-third of the world’s oil.
Differing Perspectives
Notably, OPEC has generally displayed more optimism about the future of oil consumption compared to other entities. In a recent report, the International Energy Agency (representing oil-consuming countries, including the U.S.) predicted that demand for oil, coal, and natural gas would reach its peak within this decade.
Investment in Diverse Energy Sources
OPEC emphasizes the necessity of investing in various forms of energy, including the vigorous development of renewable sources. The organization acknowledges the importance of mitigating carbon dioxide emissions from hydrocarbon-based energy production and emphasizes the need for significant investment in carbon-capture technologies.
Investing in the future of energy is crucial, given rising global energy demands. OPEC’s report underscores the necessity of these investments in order to secure a sustainable and resilient energy future.
OPEC Forecasts Shift in Global Fuel Usage by 2045
The Organization of the Petroleum Exporting Countries (OPEC) recently released its long-term fuel usage forecast, predicting significant changes in the energy landscape by 2045. According to the organization, oil is expected to account for just under 30% of global fuel usage, slightly lower than the 31.2% projected for 2022. On the other hand, renewable energy (excluding hydropower and biomass) is expected to make up 11.7% of global demand by 2045, a substantial increase from the 2.7% estimated in 2022.
OPEC’s forecast is based on its expectations of robust economic and population growth over the next few decades. The organization anticipates a global population increase of approximately 1.5 billion, reaching 9.5 billion by 2045. Moreover, it predicts that global economic output will rise by 3% per year, reaching $270 trillion in 2045.
Looking at its own role in meeting future oil demand, OPEC foresees a significant contribution. Non-OPEC supply is expected to rise by 4.1 million barrels a day to reach 69.9 million barrels a day by 2045, according to the organization’s latest forecast. Meanwhile, OPEC plans to increase production by 11.9 million barrels a day, bringing it to 46.1 million barrels a day. If achieved, this would mean that OPEC’s share of the world’s liquid hydrocarbon output would rise to 40%, up from the current 34%.
In one alternative scenario, referred to as the “advanced technology scenario,” OPEC considers an accelerated implementation of renewable energy sources. Under this scenario, primary energy demand would be 55 million barrels of oil equivalent per day lower than the reference case. Consequently, oil demand would stabilize at over 100 million barrels a day around 2035, gradually declining to around 98 million barrels a day by 2045.
The second alternative scenario involves developing countries successfully challenging current low-emission policies and targets adopted by many nations. In this case, OPEC predicts a faster return to economic growth in these countries, resulting in oil demand exceeding 113 million barrels a day by 2030 and reaching 122 million barrels a day by 2045.
Overall, OPEC’s forecast provides insights into the changing dynamics of global fuel usage and highlights its own plan to meet the world’s growing oil demand.
