OPEC’s latest outlook sheds light on pivotal energy and oil demand trends

OPEC recently launched its 2024 World Oil Outlook (WOO), offering a newly extended assessment of global energy prospects out to 2050.

The Outlook draws on recent energy and economic developments, including the interplay between energy security, affordability and emissions reduction, as well as the role of existing and new technologies.

At a time of global uncertainty, and amid pushback from policymakers and populations on unrealistic net-zero targets, publications like the WOO remain critical in helping to foster data-driven analysis that provides policymakers with a transparent assessment of how our energy futures might evolve.

Towards this end, and to act as food for thought during discussions at ADIPEC, I would like to highlight three key points related to rising energy demand, including for oil.

First, the world is facing major demographic, societal, and technological shifts that clearly point to the need to utilize all energy sources while also reducing emissions.

The global population, currently over 8 billion, is expected to reach 9.7 billion by 2050. Half a billion people are set to move into cities worldwide by 2030, equating to 164 cities the size of Dubai. The middle class is also projected to grow by one billion in the same timeframe, meaning more people flying, owning cars, and requiring more energy overall.

Additionally, emerging technologies like Artificial Intelligence are already straining energy infrastructure and will continue to do so. For example, the expansion of US data centres is currently driving the fastest growth in power demand there since the start of the millennium, and it shows no signs of stopping.

Second, the global economy is expected to more than double in size by 2050, expanding from $165 trillion to $358 trillion, with non-OECD countries leading overall growth.

This economic expansion will require a reliable, affordable and sustainable energy mix at scale, one that no single source of energy alone can deliver.

Moreover, it is a future that requires hydrocarbons, which currently provide over 80% of the world’s energy, as they have done since the 1980s.

Third, global primary energy demand is set to rise by 24% out to 2050, underscoring the world’s rising demand for all fuels. Indeed, the WOO sees an expansion in all energies, the exception being coal.

By 2050, our Outlook sees renewables like wind and solar expanding to comprise 14% of primary global energy demand, up from 4% today. It is oil and gas, however, that will maintain their energy dominance in the global energy mix by 2050, making up 29% and 24%, respectively.

Furthermore, the WOO estimates that global oil demand will increase to over 120 million barrels per day (mb/d) by 2050, again driven by the non-OECD region. This is in keeping with the fact that global oil demand records continue to be broken each year, with demand in 2023 expanding in almost every region to average over 102 mb/d, and 2024 growth also remaining significant.

Moving forward, we see sectors like petrochemicals, road transportation and aviation continuing to drive this oil demand growth. The world will need more petrochemical products, the global vehicle fleet is expected to increase from 1.7 billion in 2023 to 2.9 billion in 2050, 70% of which will likely still be using internal combustion engines, and more people will be taking flights.

These three points alone demonstrate that balancing sustainable and equitable development with much-needed energy affordability and energy security requires adequate investment in all energies and all technologies.

Indeed, to ensure a continued reliable supply of oil, OPEC estimates that over $17 trillion in oil sector investments are needed out to 2050, or $640 billion annually.

In parallel with investing in oil to meet future energy demand, OPEC Member Countries are seeking to balance energy security with sustainability by investing in renewables, enhancing efficiencies and implementing low-emissions solutions. These efforts include mobilizing cleaner technologies and developing carbon capture initiatives.

Ultimately, the energy futures of more than eight billion people – soon to be 9.7 billion – depend on fostering an investment-friendly climate that acknowledges the profound shifts in demographics, society, technology, economics and energy before us.

Our choices today will shape the energy world of tomorrow. Thanks to publications like the WOO, we can ensure our decisions are well informed.