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Nathaniel Bullard

OPEC Looks Ahead and Sees Oil's Plateau

Climate concerns and the rise of renewables are weighing on the cartel’s forecast for demand growth in the coming decades.

Things are not looking up for oil.

Things are not looking up for oil.

Photographer: Vincent Mundy/Bloomberg

The Organization of the Petroleum Exporting Countries this week published its annual World Oil Outlook, a reliably huge and dense examination of the future of the cartel’s main product, as well as the markets that will drive its growth and compete against it. Bloomberg Opinion’s Liam Denning referred to this year’s outlook as “dour” and, in the medium term, even despairing of its members’ contribution to the global supply of crude oil, natural gas liquids and other liquid fuels. Let’s examine OPEC’s views on hydrocarbon demand, key sectors and the future of energy in general.

While the global oil market is reliably huge, in OPEC’s view, parts of it are soon to be ex-growth, and by 2040 — the end of its forecast — global demand will hardly grow at all. Starting in 2020, oil demand growth in OECD countries turns negative. India and China are reliable growth markets throughout, though to a declining degree, while demand from Organization for Economic Cooperation and Development countries continues to erode. The net result is that oil demand is expected to grow by only 100,000 barrels per day in 2040, in a market with daily demand in excess of 110 million barrels. A 0.09% growth rate is very close to no growth at all.