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OPEC cuts oil demand for the next four years

OPEC cut their global oil demand projections for the next 4 years as Chinese growth slows. However, they raised their longer-term outlook due to the rising oil demands in developing countries and said that there was no proof demand had peaked.

OPEC+, a producer group that includes the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia pumping more to regain the market share lost after years of market support cuts. 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.

OPEC, however, expects oil demand to peak in this decade, a decade later than other forecasters such as BP and International Energy Agency.

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.

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

"This is due to the slower economic growth and the increased penetration of EVs, charging infrastructure and the continued use of oil in many sectors," OPEC stated with reference China.

GAP WITH IEA

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 likely have spillover effects on 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 group estimates that $18.2 trillion will be needed to invest by 2050 compared to $17.4 billion estimated last year. (Editing by Barbara Lewis).

(source: Reuters)