Paris-based International Energy Agency (IEA) and the producer group Organisation of Petroleum Exporting Countries (OPEC) have emerged most divided on oil demand forecast than they have been since at least 2008. The IEA, which expects demand growth to be much lower, updates its forecasts on Thursday.
According to a report by news agency Reuters, the gap in demand projections between the IEA, which represents industrialised countries, and the OPEC means that the groups are indicating opposite signals to traders and investors on market strength in 2024. In the longer term, the two groups are also sending divergent signs about the speed of the world’s transition to cleaner fuels.
Also Read: Explained | Why did OPEC+ members extend oil output cuts to mid-2024
The IEA predicted in February this year that oil demand will rise by 1.22 million barrels per day (bpd) in 2024, while OPEC expected 2.25 million bpd in its February report. The difference in the projections is about one per cent of world demand. The IEA also expects demand to peak by 2030 while OPEC sees no peak in its forecasts, which stretch to 2045.
OPEC finds IEA remarks on oil security ‘encouraging’
Despite differences on demand forecasts, OPEC also said on Wednesday it was encouraged by a commentary from the IEA which underlined the importance of oil security. “At OPEC, we are encouraged by this message and the reference to the continuing importance of oil to the world,” said OPEC in a statement.
In 2021, the IEA said investors should not fund new oil, gas and coal supply projects if the world wants to reach net zero emissions by mid-century, a turnaround from earlier calls to invest more. Around 200 countries at December’s COP28 climate summit agreed the world needs to transition away from fossil fuels.
In 2022, OPEC decided it would stop using data from the IEA when assessing the state of the oil market. IEA and OPEC are the world’s most closely watched forecasters of oil demand growth. Meanwhile, on Wednesday, international crude oil prices gained two per cent to hit a four-month high mark of $83.89 per barrel after Ukraine attacked a Russian refinery posing supply disruptions.
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