Home Oil and Gas OPEC sees no peak oil demand long term as Russia’s oil output exceeded OPEC+ quotas in May

OPEC sees no peak oil demand long term as Russia’s oil output exceeded OPEC+ quotas in May

by Business News Report

Secretary General of Oil Producing Countries, OPEC, says it does not see a peak in oil demand in its long-term forecast and expects demand to grow to 116 million barrels a day by 2045, and may be higher. Meanwhile, Russia’s energy ministry said that its oil production in May exceeded quotas set by the OPEC+ group of major oil producing countries, while pledging to meet its obligations. It did not provide production figures. The ministry said in a statement that the issue of overproduction would be resolved in June and targeted levels would be achieved. The Organisation of the Petroleum Exporting Countries and allies led by Russia, together known as OPEC+, have made a series of deep output cuts since late 2022. Under the OPEC+ accord, Russia’s production quota stood at around 9.1 million barrels per day in May, including extra voluntary cuts, pledged by eight group members. 

The excess production will be made up for during the compensation period until September 2025, the energy ministry also said on Thursday. OPEC+ agreed on June 2, to extend most of its deep oil output cuts well into 2025 as the group sought to shore up the market amid tepid demand growth, high interest rates and rising U.S. production. OPEC+ agreed to gradually phase out the cuts of 2.2 million bpd, pledged by eight members including Russia, over the course of a year from October 2024 to September 2025. The International Energy Agency said in a report on Wednesday it sees oil demand peaking by 2029, levelling off at around 106 million barrels per day (bpd) towards the end of the decade. Hathaim Al Ghais, writing in Energy Aspects, called the IEA report “dangerous commentary, especially for consumers, and will only lead to energy volatility on a potentially unprecedented scale”.

OPEC+, which groups de facto Saudi-led OPEC, the Organisation of the Petroleum Exporting Countries, and allies including Russia, has made a series of deep output cuts since late 2022 to support the market. OPEC+ members are cutting output by a total of 5.86 million bpd, or about 5.7% of global demand. That includes cuts of 3.66 million bpd, which the group on June 2 agreed to extend by a year until the end of 2025, and cuts of 2.2 million bpd, which OPEC+ will gradually phase out over the course of a year from October. The Paris-based IEA, which advises industrialised countries, moved forward the date for peak oil demand after having said in October that it would occur by 2030. It said oil demand would begin to contract in 2030 while the U.S. and other non-OPEC countries add to supply. Al Ghais said similar narratives had been proven wrong previously, such as the IEA suggesting gasoline demand had peaked in 2019 or that coal demand had peaked in 2014. “At OPEC, we see oil demand growth of 4 mb/d over the two years of 2024 and 2025, with other forecasters also seeing an expansion of over 3 mb/d. Even the IEA sees growth of 2 mb/d over this period, followed by growth of 0.8 mb/d in 2026. It then dramatically drops off a cliff to almost no growth in the next four years through 2030,” he said. This is an unrealistic scenario, one that would negatively impact economies across the world. It is simply a continuation of the IEA’s anti-oil narrative.”

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