OPEC Projects 19% Oil Demand Surge by 2050 Driven by India and U.S. Paris Accord Withdrawal

OPEC has maintained its optimistic stance on oil demand, projecting a 19% surge by 2050, reaching 123 million barrels per day. This projection, released in the latest World Oil Outlook, marks a 3 million barrel increase from their previous forecast in September. The organization attributes this growth to rising demand from India and the impact of the U.S. withdrawal from the Paris climate accord, which is expected to boost hydrocarbon demand.

OPEC's report highlights that the U.S. withdrawal from the Paris Agreement will likely result in higher demand for oil and gas. Additionally, the group anticipates a short-term increase in U.S. oil demand despite global pressure to phase out fossil fuels. OPEC is not considering a shift to clean energy and instead is focusing on increased oil production for the foreseeable future.

OPEC's perspective contrasts sharply with other major energy forecasters, including BP, Bank of America, the International Energy Agency, and Wood Mackenzie, all of which predict that oil demand will peak within the next decade. These forecasters cite slowing economic growth in China, improved fuel efficiency, and the global transition to renewables as reasons for the expected decline in oil demand. However, OPEC remains steadfast in its bullish outlook, recently announcing plans to increase crude supply by 548,000 barrels per day in August, four times the originally planned amount.

Despite market stability, with Brent crude hovering near $70 per barrel, OPEC's past forecasts have not always been accurate. In 2023, the organization imposed deeper output cuts, predicting tight inventories, but the anticipated squeeze did not materialize. Now, OPEC projects a 9% increase in oil consumption between 2024 and 2030, driven primarily by road transport, petrochemicals, and aviation, with India leading the growth by adding 8.2 million barrels per day by 2050.

OPEC also anticipates an increase in its market influence, with the OPEC+ alliance expected to control 52% of the global oil market by 2050, up from the current 48%. This shift is attributed to slowing production growth in other countries. Meanwhile, global flight activity has reached an all-time high, with sustained expansion in freight traffic, indicating robust demand in the aviation sector.

OPEC's optimistic outlook on oil demand stands in stark contrast to the broader consensus among energy forecasters, who predict a peak in oil demand within the next decade. Despite this divergence, OPEC remains committed to its strategy of increased oil production, believing that oil will continue to be a critical energy source in the future. The organization's bullish stance is underpinned by its projection of a 19% surge in oil demand by 2050, driven by rising demand from India and the impact of the U.S. withdrawal from the Paris climate accord.