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OPEC cuts oil demand for the next four years and says there is no peak in sight

OPEC cut their global oil demand projections for the next 4 years as Chinese growth slows. However, they raised their longer-term outlook based on the rising consumption of oil in developing countries. They also said that there were no signs to suggest oil usage had peaked.

The OPEC+ group, which includes the Organization of Petroleum Exporting Countries and its allies, including Russia, pumps more barrels in order to regain market shares after years of cutting back to support the markets. A lower medium-term demand may make it more difficult for the group's other cuts to be unwound, as they remain in place through the end of 2026.

OPEC's 2025 World Oil Outlook, published on Thursday, predicts that world demand will average 105 millions barrels of oil per day in 2019. The OPEC expects the demand to increase to an average of 106.3 million barrels per day in 2026, and then to 111.6 millions bpd by 2029.

All forecasts of demand for 2026-2029 are lower than the previous year. OPEC has said that demand will average 106.3 millions bpd by 2026. This is down from 108.3 million bpd last year. The forecast for 2029 is 700,000 bpd lower than last year.

Compared to other forecasters, OPEC anticipates that demand will grow for a much longer period. BP and International Energy Agency predict that oil consumption will peak in this decade.

In the preface to the report, OPEC Secretary-General Haitham Al Ghais stated that "Oil is the foundation of the global economy and central to our everyday lives." There is no imminent peak in oil demand.

The report will be launched at the biennial OPEC Seminar in Vienna which brings together oil executives and ministers. OPEC denied journalists from and other news organizations access to its seminar. OPEC refused to comment about why they were doing this.

OPEC stated in its report that the demand has recovered from the COVID-19 epidemic, resulting a more stable outlook. OPEC also said that China's growth is slowing, the country which has been driving oil consumption higher over the past few decades.

The OPEC referred to China by saying, "This is due to the slower economic growth and the increased penetration of EVs with charging infrastructure as well as the continued use of oil in many sectors."

OPEC+ started to reverse its output cuts of 2,17 million bpd with a 138,000 bpd production boost in April. In May, June and July, there were monthly increases of 411,000 bpd.

Separate cuts of 3,65 million bpd are still in place by the group until 2026. On Thursday, two OPEC+ delegates stated that there had not been any discussion on the release of this extra oil.

GAP WITH IEA AND BP

OPEC's forecast for 2030 demand remained unchanged from the previous year.

The International Energy Agency, on the other hand, expects the global demand to peak in 2029 at 105.6 millions bpd and then to fall slightly by 2030, said the advisor to industrialised nations last month.

OPEC believes that India, the Middle East, and Africa will drive the growth in the long term. OPEC says that developments such as the U.S. leaving the United Nations Climate Pact and a lower EV penetration rate will influence behavior and slow down the energy transition for developing countries.

OPEC predicts that the world's oil demand will reach 122.9 millions barrels per day in 2050. This is up from the 120.1 million bpd predicted in last year’s report. This is far higher than other industry forecasts for 2050, such as those of BP.

OPEC is calling for increased investment in the oil industry. The sector will need to spend $18,2 trillion by 2050 compared to $17,4 trillion estimated last year.

(source: Reuters)