Not everyone shares OPEC's optimism about long-term oil demand growth.

• OPEC released its 2024 World Oil Outlook, predicting strong oil demand growth.
• Other players in the market are far less optimistic about demand.
• Subdued crude prices are expected to persist for an extended period due to low global demand forecasts and new oil supply from non-OPEC countries.

The global benchmark falling below $70 a barrel in early September, its lowest in 33 months, is great news for consumers as they will experience lower prices at the pump.

For OPEC+, whose oil revenues are vital, it's a nightmare scenario.

The oil producer alliance, led by Saudi Arabia, delayed oil production hikes for two more months to stabilize prices, but this move has not been successful. Due to low global demand and new oil supply from non-OPEC countries, crude prices are expected to remain low for an extended period.

Some in the market are questioning whether we have reached "peak oil" and if demand growth has plateaued, signaling a potential decline.

By the forecasts of OPEC itself, that's a hard no.

The oil producer group's 2024 World Oil Outlook report, released Tuesday, predicts a 24% increase in global energy demand between now and 2050. Additionally, the report forecasts "robust medium-term growth" in oil demand, reaching 112.3 million barrels per day in 2029, an increase of 10.1 million barrels per day compared to 2023.

The International Energy Agency (IEA) disagrees with the calculation of energy analysts that global oil demand will continue to rise. Instead, the IEA predicts that demand will level off by the end of the decade to around 106 million barrels per day, according to its annual mid-term outlook published in June.

In recent years, the public has focused on the conflict between OPEC and the IEA regarding their forecasts for the future, with the IEA advocating for a net-zero future.

S&P Global Commodity Insights predicts that demand for oil will peak at 109 million barrels per day in 2034 before gradually declining to fall below 100 million barrels per day in 2050.

In contrast, OPEC predicts demand to reach a staggering 120 million barrels per day by 2050.

While demand will decline in developing countries, it will increase in emerging markets, particularly India.

The medium-term outlook

Despite OPEC+'s decision to prolong crude production cuts until December, analysts remain pessimistic about oil demand and prices in the near-to-medium term.

According to Dave Ernsberger, head of market reporting at S&P Global Commodity Insights, the two-month extension hasn't convinced skeptics about the market that it will significantly boost prices.

"The pressing concern is the immediate problem, but the larger issue is existentially, are we beyond the peak of oil demand?"

The maritime industry is seeing a rise in the use of biofuels as an alternative energy source, according to Ernsberger.

"The current era is characterized by post-demand growth, which is different from the post-oil moment. However, it is a post-growth moment. How will OPEC+ and the market adapt to a world with low or no overall demand growth?"

The world's largest oil importer, China, is taking a dedicated path towards electrification, which is dimming prospects for price increases.

According to Li-Chen Sim, a non-resident scholar at the Washington-based Middle East Institute, the biggest threats to higher prices for OPEC+ come from external factors.

The main reasons for the decline in oil prices are low demand, particularly from China, increased supply from non-OPEC+ sources, and some members producing more than their assigned quotas.

According to Sim, estimates from international and Chinese sources indicate a decrease in demand for oil and refined products in China.

Despite the slowing Chinese economic growth of around 3% to 5% annually in recent years, it is still better than many other countries, she pointed out.

Sim stated that the reduction in oil consumption is also influenced by a deliberate effort to decrease dependence on oil (and gas) imports, as expressed through policies such as promoting the use of electric vehicles and expanding renewable and nuclear power.

In the near future, OPEC+ is predicted to bring some production back in December, several countries in the alliance are producing above their quotas, and more supply is being added to the market from non-OPEC+ producers such as the U.S., Guyana, Brazil, and Canada.

Ernsberger stated that it is unlikely for prices to rise significantly as long as the threat of bringing back supplies remains in the market.

If the oil era eventually declines, it will be due to changing demand rather than dwindling supply, many analysts contend.

In 2000, Saudi Sheikh Ahmed Zaki Yamani stated that the end of the Oil Age would not be due to a shortage of oil, but rather because of other factors.