Oil is set to remain a critical element in future energy strategies, as highlighted by the necessity of petroleum products for various sectors, according to Haitham Al Ghais, the Opec secretary-general. Al Ghais responded to forecasts from the International Energy Agency indicating a decline in global oil demand due to the rapid adoption of electric vehicles. The Opec leader noted that member nations of the oil producers alliance have robust national electrification strategies aimed at lowering emissions. Al Ghais emphasized that the expansion of electrical networks relies on petroleum-derived products, such as insulation materials for underground cables and oil for transformers.
Al Ghais warned that halting new investments in oil projects could disrupt the production of essential oil products necessary for the smooth operation and expansion of electrical grids. Opec recently projected an increase in global oil demand, with an anticipated rise of 2.25 million barrels per day in 2024 and 1.85 million barrels per day in 2025. The July monthly report from Opec stated that total global oil demand is expected to hit 104.5 million barrels per day in 2024, driven by markets in China, the Middle East, India, and Latin America.
Despite these projections, energy market analysts hold varying opinions on the oil price-demand dynamic. They observe that crude oil prices have remained stable within a narrow range for about a year, with opposing bullish and bearish factors balancing each other. However, some analysts predict a potential market breakout, uncertain whether it will be bearish or bullish. Bank of America analysts anticipate a drop in oil prices to the $60s by year-end, overshadowing positive developments, which could maintain a strong focus on China.
Rystad Energy reported that global recoverable oil reserves are lower than previously estimated, which should theoretically support higher oil prices. However, the impact was muted due to the abstract nature of total reserves compared to daily output and demand trends. Rystad calculated the total recoverable reserves at 1.5 trillion barrels, a decrease of 52 billion barrels from last year's estimates. Based on these figures, Rystad projected that oil production could peak at around 120 million barrels daily by 2035 and then decline to 85 million barrels daily by 2050.
