by P. Homewood, June 14, NotaLotofPeopleKnowThat
A recent flurry of forecasts offers us a range of different views on what’s happening to the global demand for, and use of, crude oil. One thing seems to be clear, however: the chances of net zero carbon emissions in the near term – ie, by 2050 – are basically zero.
The year so far has been a bit of a rollercoaster ride in this realm of uncertainty, with projections and forecasts more volatile than the market itself. Crude prices have remained relatively strong despite various occurrences across Europe and the Middle East that would have resulted in major upsets in decades past.
One major point of consensus related to global oil demand growth is the expectation that it will continue to be robust, driven by a combination of factors including economic recovery, increased travel, and surging industrial activity in non-OECD nations.
The only major body not seeing continued, massive growth is the International Energy Agency (IEA), which revised its numbers this week to predict that crude demand will rise by just 1 million barrels per day (bpd) next year and will (at last!) peak “towards the end of this decade” at 106 million bpd, up from 102 million at the moment. The IEA expects this growth to be led by non-OECD countries, particularly China and India. The IEA and others have highlighted the importance of these regions in driving global oil demand.
The IEA, which is funded by 31 industrialized nations through a dues structure, says that it believes growth in demand from India, China and elsewhere will be gradually outweighed by the expected rollout of electric vehicles and other green technologies. However, one should note that the agency has been shifting for a long time from being an analytical organisation to being essentially a green campaigning one, and its forecasts nowadays are as much attempts to influence markets as to genuinely predict them.
In contrast to the IEA, the US Energy Information Administration (EIA) raised its 2024 global oil demand growth forecast to 1.1 million barrels per day, up from its previous estimate of 900,000 bpd. This revision is based on expectations for travel and tourism in the second half of the year. EIA projects even stronger demand growth for 2025 of 1.5 mbpd, again clashing with the IEA which sees just 1 mbpd that year, with non-OECD countries accounting for most of the growth. The US federal agency also raised its projection for crude prices to rise to an average of $87/barrel in Q4 2024 based on the rising demand.
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