OPEC sees no oil demand peak to 2050, challenging IEA view

OPEC on Thursday maintained its forecast for strong global oil demand growth over the next four years and nudged up its longer-term outlook, citing a worldwide shift toward more supportive policies for oil use and stating there is no sign demand will peak to 2050.

"The global shift toward more supportive policies for oil use, combined with continued economic growth in developing economies, underpins our view that oil demand will continue to rise through the middle of the century," OPEC said in its monthly oil market report published Thursday.

The producer group now sees oil demand growing by 970,000 barrels per day in 2026, a downward revision from its earlier forecast but still implying year-on-year expansion. That contrasts sharply with the International Energy Agency, which projects global oil demand will fall by 1.1 million barrels per day this year — a 700,000 barrel-per-day downgrade from its previous estimate — as higher fuel prices and supply disruptions from the Strait of Hormuz closure destroy consumption. The IEA estimates oil deliveries plunged by 5 million barrels per day in the second quarter alone, the deepest quarterly contraction since the COVID-19 pandemic.

The divergence between the two most influential oil forecasting bodies has rarely been wider. OPEC's view suggests the market will need continued investment in new supply for decades, while the IEA's data implies the industry faces a near-term glut of more than 5 million barrels per day by 2027 as Middle East production returns. Which forecast proves correct will determine whether oil prices stay near $80 a barrel or fall sharply, with implications for energy company valuations, inflation trajectories and central bank policy across the developed world.

OPEC's Long-Term Bet

OPEC's long-term outlook, which extends to 2050, is built on the assumption that developing economies — particularly in Asia and Africa — will drive oil demand growth as their populations expand and industrialize. The group sees no scenario in which global oil demand peaks before mid-century, a position that puts it at odds with most major energy forecasters including the IEA, BP Plc and Shell Plc, all of which project demand plateauing or declining within the next 15 years.

The IEA's latest projections show global oil supply surging by 8 million barrels per day in 2027 to 110.3 million barrels per day, while demand grows by just 2 million barrels per day to 105.3 million. That would create a surplus of more than 5 million barrels per day, according to Reuters calculations based on the IEA data — a glut that would give countries an opportunity to replenish strategic petroleum reserves depleted during the Iran conflict. OECD government stockpiles have fallen to their lowest level since December 1990, declining by 163 million barrels since the conflict began.

The Policy Divergence

The competing forecasts reflect fundamentally different assumptions about the pace of the energy transition. OPEC points to what it describes as a "worldwide shift toward more supportive policies for oil use," citing recent policy reversals or slowdowns in renewable energy mandates across several countries. The IEA, by contrast, sees the Hormuz crisis as a temporary disruption that will accelerate the push for energy diversification and efficiency.

The last time OPEC and the IEA diverged this sharply was in 2015-2016, when OPEC's bet on rising demand proved correct as prices recovered from below $30 a barrel. But the IEA's bearish demand view in 2020, during the pandemic, also proved prescient — global oil demand contracted by 9 million barrels per day that year, the largest single-year drop on record.

Brent crude traded near $81 a barrel on Thursday, down more than $40 from its April peak after the U.S. and Iran reached an interim agreement to end the war and reopen the Strait of Hormuz. The price collapse has already forced OPEC and its allies to reconsider production strategy, though the group has not yet announced any output adjustments. The next OPEC+ ministerial meeting is scheduled for early July, where the demand outlook will be a central topic.

This article is for informational purposes only and does not constitute investment advice.