OPEC, one of the top oil producing groups in the world, issued the 13th edition of its World Oil Outlook, which provides an in-depth review of how OPEC views the medium-to long-term prospects for the global oil industry.

   With the hydrocarbon molecule under threat in many quarters, oil folks can take heart in some of OPEC’s viewpoints, chief of which is that oil is expected to remain the fuel with the largest share of the energy mix through the forecast period to 2040.

   Oil demand growth is expected to reach 110.6 million b/d by 2040, which compares to around 99 million b/d today.

   Long-term demand growth comes mainly from petrochemicals (4.1 million b/d); road transportation (2.9 million b/d); and aviation (2.4 million b/d).

   OPEC does acknowledge that all forms of energies will be needed in the future to meet expanding demand and to satisfy social, economic, and climate needs.

   Natural gas is expected to see the largest amount of growth in absolute terms and renewables the biggest growth in percentage terms.

   There is a marked separation between oil demand growth in the developed or OECD countries compared to the developing or non-OECD sector. OPEC projects non-OPEC demand growth will fuel the future with growth of 21.4 million b/d by 2040 (versus 2018 baseline), whereas demand contracts 9.6 million b/d in the developed countries.

   The total vehicle fleet – including passenger and commercial vehicles – is estimated to grow by more than 1 billion by 2040 to around 2.4 billion.

   By 2040, OPEC estimates that electric vehicles share of the total global fleet will expand to 13%, supported by government policies and declining battery costs. Most of the vehicle growth continues to be via conventional vehicles.

  In terms of oil supply growth, OPEC sees non-OPEC liquids supply expanding by 9.9 million b/d from 2018’s baseline through 2024 – most of that coming from the U.S. tight oil. However, from the mid-2020s forward non-OPEC oil production starts to decline.

  Demand for OPEC’s own liquids ins projected to increase to around 44.4 million b/d by 2040, up from 36.6 million b/d in 2018.

   The report estimates that crude distillation capacity additions will be around 8 million b/d between 2019 and 2024, with over 70% in the Asia-Pacific and the Middle East. This is close to 50% of the total capacity additions required in the long-term to 2040.

   In the period to 2040, OPEC estimates that amount of investment needed in the global oil sector is $10.6 trillion.

   The report also points out that the “world needs to look for cleaner and more efficient technological solutions everywhere, across all available energies” and that OPEC fully supports the Paris Agreement on climate change and that the oil industry “has to be a part of the solution to climate change” since it possesses the critical resources and knowledge to unlock a more carbon-free future.

OPIS by IHS Markit