A key point of consensus regarding global oil demand is the expectation that it will remain robust, driven by a combination of factors including economic recovery, increased travel and rising industrial activity in non-OECD countries.
The only major body not seeing sustained, massive growth is the International Energy Agency (IEA), which revised its figures this week and forecast that crude oil demand will rise by just 1 million barrels per day (bpd) next year and that will (finally!) peak “by the end of this decade” at 106 million barrels per day, up from 102 million currently. The IEA expects this growth to be led by non-OECD countries, especially China and India. The IEA and others have emphasized the importance of these regions in boosting global oil demand.
The IEA, which is funded by 31 industrialized countries through a contribution structure, says it believes demand growth from India, China and elsewhere will be gradually offset by the expected rollout of electric vehicles and other green technologies. It should be noted, however, that the agency has been shifting from an analytical organization to an essentially green campaigning organization for some time now, and its forecasts these days are as much attempts to influence the markets as they are to actually predict them.
In contrast to the IEA, the US Energy Information Administration (EIA) has raised its forecast for global oil demand in 2024 to 1.1 million barrels per day, up from the previous estimate of 900,000 barrels per day. This revision is based on expectations for travel and tourism in the second half of the year. EIA expects even stronger demand growth of 1.5 million barrels per day by 2025, again clashing with the IEA which expects only 1 million barrels per day that year, with non-OECD countries accounting for most of the growth . The US federal agency also raised its forecast for crude oil prices to rise to an average of $87/barrel in the fourth quarter of 2024 on 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 by 2024. The bank cites robust growth in jet fuel, petrochemical-driven LPG and naphtha, and demand for gasoline and diesel as key growth drivers. this growth. Goldman analysts expect strong demand for transportation fuels to push oil prices to average a robust $86 in the second half of the year.
The Organization of the Petroleum Exporting Countries (OPEC) stuck to the most optimistic outlook for demand growth, again refusing to change its initial forecast of 2.25 mbpd growth for 2024. OPEC also expects strong growth in global oil demand in 2025, with an expected increase of 1.85 mb/d. The organization noted that the OECD is expected to grow by 0.1 million barrels per day, while demand in non-OECD countries is expected to increase by 1.7 million barrels per day.
“Globally, the services sector is maintaining stable momentum,” OPEC said. “Oil is expected to be the main contributor to economic growth dynamics in the second half of 2024, mainly supported by travel and tourism, with a resulting positive impact on oil demand.”
The cartel also reaffirmed its previous forecasts for strong global economic growth of 2.8 percent in 2024 and 2.9 percent in 2025. “A shift towards looser monetary policy by major central banks is expected in the second half of 2024 and throughout the rest of 2025, especially in the US. the eurozone and Britain, which can also support global growth in the short term,” the report said.
Readers need not point out that OPEC has the same kind of problem as the IEA, but in the opposite direction. The forecasts from EIA and Goldman Sachs are probably the most reliable.
Although growth forecasts vary considerably between these different entities, even within the IEA there is an overarching consensus of strong growth in global crude oil demand for 2024/2025, largely based on rising demand from developing countries in the Global South, together with fairly robust overall economic growth. grow. All four forecasts are also largely in agreement on the prospects for robust, rising crude oil prices in the second half of 2024.
It should be noted that continued strong demand for crude oil is accompanied by similarly strong growth in demand for natural gas, coal and even wood in the energy sector. Given that all of these forms of carbon-intensive fuels saw record or near-record demand in 2023, they are all likely to set new records for 2024 and probably 2025 as well.
In other words, humanity is using more carbon-intensive fuels than ever before, and will use more and more in the future. The vaunted ‘energy transition’ is simply not happening.
Net zero carbon emissions by 2050 is, for all intents and purposes, dead.
David Blackmon had a 40-year career in the U.S. energy industry, with the last 23 years in the public policy arena, where he managed regulatory and legislative issues for several companies. He continues to write and podcast about energy issues