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OPEC VERSUS PEAK FOSSIL FUEL PROJECTIONS: OPEC is raising its demand forecast, projecting 2045 global oil demand to be around 116 million barrels per day – standing in stark contrast with estimates from the International Energy Agency, which sees fossil fuel demand peaking this decade.
In its annual World Oil Outlook report published on Monday, the cartel sees worldwide oil demand to increase by more than 16 million bpd between 2022 and 2045, rising from 99.6 million barrels per day in 2022. This is 6 million more than their previous projections of 110 million bpd in 2045.
“For this to be achieved, oil sector investment requirements out to 2045 total $14 trillion, or around $610 billion on average per year. It is vital that these are made; it is beneficial for both producers and consumers,” Haitham Al-Ghais, the secretary general of OPEC, writes in the outlook foreword.
That’s a major split with the IEA, whose head predicted fossil demand will peak before 2030. This benchmark was moved up from the end of the decade due to a rise in renewable energy technologies and a shift in major economies, such as China, away from coal.
Fatih Birol, the head of the IEA, has also pointed to production cuts from Saudi Arabia and Russia contributing to a shift in higher oil prices – making renewable energy relatively cheaper.
A difference in approach: OPEC and the IEA have butted heads on demand forecasts before, with Al-Ghais warning the IEA back in April that it should be “very careful” about making such comments, arguing it could cause market volatility.
“Calls to stop investments in new oil projects are misguided and could lead to energy and economic chaos,” Al-Ghais writes in the World Oil Outlook’s forward. “History is replete with numerous examples of turmoil that should serve as a warning for what occurs when policymakers fail to acknowledge energy’s interwoven complexities.”
Other notables in the report: Global demand is also set to reach more than 110.2 million barrels a day in 2028, representing an increase of 10.6 million bpd compared to 2022.
The report also lays out that non-OECD oil demand is expected to increase by almost 26 million barrels per day between 2022 and 2045 – while OECD oil demand is expected to decrease by 9.3 million bpd.
The largest non-OECD oil demand is expected to come from India, China and other Asian countries, African states, and Middle Eastern countries. India will have the highest oil demand contributions between 2022 and 2045, adding 6.6 million barrels a day.
The report also lays out that the largest incremental demand is expected to be for the road transportation, petrochemical, and aviation industries. Read the report here.
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OIL JUMPS ON HAMAS ATTACKS: Oil prices jumped by 4% today following Hamas’s military assault against Israel, with crude futures pushing towards $89 per barrel amid fears that a broader military escalation in the area could cut into oil exports from the Middle East.
Both benchmarks saw an increase of more than 5% at session highs today before easing slightly.
Analysts said the conflict threatens to inject more volatility into oil markets, and risks throttling exports from countries such as Iran, which has stepped up its oil production to nearly 600,000 bpd this year, helping alleviate some of the market tightness imposed by Saudi Arabia and Russia’s voluntary oil cuts.
“If the U.S. were to judge that Iran is involved in Hamas’ attack, this could lead it to ‘turn the screws’ on Iran’s oil exports by enforcing sanctions more strictly,” Caroline Bain, the chief commodities economist at Capital Economics, told Reuters.
US EYES NEW OIL PRICE CAP ENFORCEMENT: The U.S. is eyeing additional enforcement measures on the Russian oil price cap amid reports that Russian Urals exports are fetching prices of $85 per barrel, or roughly $25 above the capped price.
In an interview with the Wall Street Journal, Treasury Secretary Janet Yellen said the U.S. would “very likely” take steps to enforce the $60-per-barrel limit of Russian crude that the G-7-led price cap coalition imposed beginning in December.
“We are looking at enforcement very carefully and we want to make sure that market participants are aware we take this price cap seriously, and, to the extent Western services are used, we mean business about abiding by the cap,” she told the outlet. (A senior Treasury spokesperson separately confirmed the news to the Washington Examiner.)
“Coalition compliance and enforcement authorities take allegations of intentional price cap violations extremely seriously and will exercise appropriate authorities to take action where appropriate,” this person told Breanne. Neither Yellen nor the Treasury spokesperson offered details on what specific mechanisms are being considered.
But the acknowledgement that additional enforcement measures are needed is new: Until recently, Treasury had been loath to admit that the price cap—a novel policy meant to limit Russia’s war chest—has been anything but successful. (The Treasury has said the cap has successfully pushed down Russian oil and gas tax revenue by 44%.)
Still, the plan has never provided much in the way of enforcement, making it difficult for countries to monitor companies and ensure compliance with price cap-related restrictions on shipping, maritime insurance, and other services. Read more from Breanne here.
EXXONMOBIL OFFICIAL ARRESTED: The head of ExxonMobil’s shale oil and gas business was arrested at a Texas hotel last week on a sexual assault charge, Reuters reports.
David Scott, an Exxon senior vice president who’s in charge of the company’s shale oil and gas production, was arrested Thursday morning at a La Quinta Inn & Suites hotel in Magnolia, Texas. He faces a second-degree felony assault charge, and was held on a $30,000 bond – to which he posted bail.
“We are aware of the allegations and cannot comment on a personal matter; however, we can say that this individual will not continue work responsibilities as the investigation proceeds,” spokesperson Emily Mir told Reuters.
One of the two women Scott was in a room with had left and called police from the lobby, a worker who saw a security video told Reuters.
Scott, who has been with Exxon for more than 26 years, started as an engineer and then later became president of the company’s United Arab Emirates affiliate. He later became head of Exxon’s Permian Basin operations in 2020, and was promoted to senior vice president earlier this year to be in charge of the company’s shale oil and gas operations. Read more on that here.
IAEA SAYS NUCLEAR POWER MUST DOUBLE BY 2050 TO AVOID CATASTROPHE: The International Atomic Energy Agency said today global nuclear power output needs to double in the next 30 years in order to mitigate “catastrophic” warming levels, stressing the need for more investments from the public sector.
“The main challenge is financing,” IEA chief Fatih Birol said at the IAEA’s quadrennial conference in Vienna.
Since private investors are not factoring in things like the long lifetime of nuclear reactors. governments “need to be in the driving seat,” leaders said.
IAEA Director-General Rafael Grossi also stressed this point, noting that nuclear reactors can run for more than a half century. “We need to think long term,” he said. “Governments and investors need comprehensive science-based data. But they are working with a data hole.”
The conference comes as the IAEA estimates that nuclear capacity is on track to increase between 458 GW and 890 GW by 2050—up from 371 GW in 2022.
Total nuclear energy output has fallen globally over the last 20 years to make up just 9% of all energy supplies, according to agency data. Read more from Bloomberg here.
EU COUNCIL ADOPTS NEW ENERGY RULES: The European Council on Monday adopted a new renewables energy directive that would raise the share of green energy used by the EU to 42.5% by 2030 – up from a previous goal of 32%. A “top-up” of another 2.5% that will aim for 45% is offered through the directive, which will be reached through voluntary contributions of member states.
After months of wrangling, the group was able to adopt amendments to the EU’s Renewable Energy Directive that establishes targets within the transportation, industrial, heating and cooling, and bioenergy sectors, and will establish a faster permitting process.
“This is a great achievement in the framework of the ´Fit for 55´package which will help to achieve the EU’s climate goal of reducing EU emissions by at least 55% by 2030,” Teresa Ribera, the Spanish acting Minister for the Ecological Transition, said in a statement. “It is a step forward which will contribute to reaching the EU’s climate targets in a fair, cost-effective and competitive way.”
Some of these targets include an “indicative target” of at least 49% renewable share in buildings in 2030, a requirement that 42% of hydrogen used in the industry be clean by 2030 and 60% by 2035, and a target of 5.5% advanced biofuels and renewable energies be supplied to the transportation sector.
The Rundown
Bloomberg Zombie viruses are waking up after 50,000 years as planet warms
The Guardian ‘I wasn’t the obvious choice’: Meet the oil man tasked with saving the planet
Bloomberg The DOE’s Jigar Shah explains how to transform the US energy landscape
