The International Energy Agency (IEA) has issued a prediction that global oil demand will reach its peak within the coming decade, largely due to the increasing adoption of electric vehicles and a slowdown in China’s economy.
Gradual Transition, Not Abrupt Decline
While the anticipated demand peak is expected by 2030, it doesn’t imply an immediate and dramatic drop in fossil fuel consumption. Instead, it will likely be followed by an extended period of fluctuating demand.
Policy-Driven Transition: IEA
The shift in energy consumption is attributed in part to policies adopted by countries to promote cleaner energy sources and more sustainable forms of transportation. The IEA suggests that by the end of this decade, road transport will cease to be a source of oil demand growth.
Divergent Projections
The IEA’s projection contrasts with those of other organizations, including OPEC, which does not foresee peak oil consumption before 2045. OPEC projects that oil demand will continue to grow, reaching 116 million barrels per day by 2045.
Dismissal of Underinvestment Concerns
The IEA has dismissed concerns about underinvestment in oil and gas resources, contending that these concerns are no longer valid given current technology and market trends. The IEA underscores the financial risks associated with major new oil and gas projects, in addition to their climate change impact.
Differing Views on Investment
OPEC has cautioned that insufficient investment in the oil sector poses a threat to global energy security and may drive crude oil prices to $100 per barrel. OPEC’s General Secretary Haitham Al Ghais emphasizes the importance of ongoing investment in oil and gas, in addition to energy transition commitments.
The Shift to Clean Energy
The IEA’s least ambitious energy transition scenario, known as the Stated Policies Scenario, implies that global demand for coal, oil, and natural gas will peak by 2030.
Projected Oil Demand
The IEA’s annual World Energy Outlook indicates that the world will consume approximately 102 million barrels of oil per day by the late 2020s, with volumes decreasing to 97 million barrels per day by mid-century.
Emphasis on Clean Energy
Fatih Birol, the Executive Director of the IEA, underscores the unstoppable global transition to clean energy, challenging the perception that oil and gas are secure choices for the world’s energy and climate future.
Revised Oil Demand Projection
The IEA has revised its 2050 oil demand projection to 54.8 million barrels per day, lowering it by 2.4 million barrels per day. In the Announced Pledges scenario, OPEC is expected to account for 45% of the 2050 oil supply, up from 42% in the previous year’s report.
Resilience of Russian Production
The IEA acknowledges the resilience of Russian oil production despite US and EU sanctions, but still projects challenges for Russia in maintaining output from existing fields and developing new ones, particularly in the context of the least ambitious scenario for global emissions reduction. Output is projected to decline by 3.5 million barrels per day by 2050.
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