Energy
Thursday, June 13th, 2024 7:10 pm EDT
Key Points
- OPEC’s Secretary General, Haitham Al Ghais, asserts that global investment in fossil fuels must continue for decades to prevent energy shortages, dismissing predictions of imminent peak oil demand. He forecasts a significant rise in oil demand by 25 million barrels per day in developing countries through 2045, driven particularly by China and India’s needs for basic services like electricity and transportation.
- Al Ghais criticizes those who ignore the ongoing necessity of fossil fuels, warning of future energy deficits and increased volatility, which could widen disparities between energy-rich and energy-poor nations. He emphasizes the essential role of crude oil-derived products in daily life, advocating sustained investment in the oil industry over the long term.
- In contrast, the International Energy Agency (IEA) predicts a substantial surplus of oil in the coming years, driven by increasing production amid slowing demand growth due to efficiency gains, electric vehicle adoption, and reduced oil use for electricity in regions like the Middle East. This surplus challenges OPEC’s efforts to stabilize prices and poses a threat to the U.S. shale industry, prompting calls for oil companies to adjust their strategies accordingly to manage potential market shifts and price declines.
OPEC’s Secretary General, Haitham Al Ghais, emphasized the enduring necessity of fossil fuels for global energy security amidst predictions of peak oil demand. Al Ghais projected a substantial rise in oil demand, particularly driven by developing nations like China and India, where millions still lack access to essential services like electricity and transportation. He warned that dismissing the role of fossil fuels could exacerbate energy shortages and widen global energy disparities. Al Ghais called for sustained investment in the oil industry over decades, highlighting the essential role of crude-derived products in daily life.
In contrast, the International Energy Agency (IEA), representing primarily developed economies, forecasted a looming surplus in global oil supply by 2030 due to slowing demand growth from efficiency gains and electric vehicle adoption. This surplus poses challenges to OPEC’s efforts to stabilize prices and could strain the U.S. shale industry. The IEA’s warnings were met with skepticism by OPEC, with Al Ghais dismissing them as potentially harmful and volatile for consumers. Industry experts like Helima Croft and Robert McNally contested the IEA’s predictions, citing policy uncertainties and infrastructure challenges as potential obstacles to a rapid energy transition.
Financial analysts from Deutsche Bank and Citi echoed concerns about OPEC’s ability to manage future oil surpluses, predicting significant downward pressure on oil prices if production growth in North America and elsewhere outpaces demand. Citi specifically projected Brent crude prices potentially dropping to $60 per barrel in the near future if supply continues to outstrip demand without significant disruptions. Overall, the debate underscores ongoing uncertainties in global energy markets, with divergent views on the trajectory of oil demand and the role of fossil fuels in a rapidly evolving energy landscape.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/06/13/opec-calls-for-more-fossil-fuel-investment-dismisses-peak-oil-demand.html
