Oil prices are little changed in Thursday’s intraday sessions after they tumbled more than 4% on Tuesday to a near two-week low on easing Iranian supply disruption fears. Brent crude for December delivery was down 0.3% to trade at $74.12/barrel at 12.50 pm ET while WTI crude for November delivery remained unchanged at $70.36/barrel. According to commodity analysts at Standard Chartered, the prevailing tone of market sentiment, particularly among the more speculative traders, remains overwhelmingly bearish, on par with that in late 2008 at the start of the Global Financial Crisis.
A big part of the bearishness has been triggered by ongoing oversupply and weak demand concerns, with the leading energy agencies issuing widely divergent oil market predictions. For instance, the International Energy Agency (IEA) sees OPEC crude oil output 700kb/d higher in 2025, OPEC+ (also known as Declaration of Cooperation, DoC) crude oil output 967kb/d higher and total DoC liquids output 1.323mb/d higher. In contrast, OPEC Secretariat figures–the average of seven secondary-source assessments are closer to those by the U.S. Energy Information Administration (EIA) rather than the IEA estimates.
And now the International Energy Agency (IEA) has stoked the flames further by predicting that global demand for all fossil fuels will stop growing this decade at a time when supplies of oil and LNG are poised to continue growing. Obviously, this is highly bearish for oil and gas prices. On a brighter note, the world’s leading energy watchdog says this development will come as a major boon for consumers because electricity prices will start declining as renewables play a bigger role in our generation mix.
“The world is set to enter a new energy market context in the second half of this decade because underlying market balances for oil and gas are easing. Bar major geopolitical conflicts, we will be entering a period where prices will see significant downward pressures,” IEA Executive Director Fatih Birol said in an interview.
According to IEA, electricity use will increase six times faster than total energy demand during the coming 10 years while electric vehicles will account for 50% of new car sales worldwide by 2030, up from 20% currently. IEA has predicted that in 2030, the levelized cost of electricity (LCOE) of solar PV with storage in the U.S. will clock in at $45/MWh, considerably lower than $70/MWh by natural gas.
“In energy history, we’ve witnessed the Age of Coal and the Age of Oil – and we’re now moving at speed into the Age of Electricity,” said Birol.
Other renewable energy bulls support IEA’s views. According to the International Renewable Energy Agency (IRENA), renewable energy reduces exposure to volatile fossil-fuel import bills; lowers average electricity system costs, and avoids the damaging impacts of high electricity prices on consumers and industry. Similar to IEA, IRENA has predicted that electricity generated by solar PV, concentrated solar power (CSP), onshore wind and offshore wind will be considerably cheaper than electricity generated using fossil fuels by 2030.
Peak Oil Demand Not Imminent
Interestingly, of the major energy agencies, only the IEA sees global oil demand peaking before 2030, even in its most optimistic forecast (high growth). However, the IEA says an oil demand peak doesn’t necessarily mean a rapid plunge in fossil fuel consumption is imminent, adding that it will probably be followed by “an undulating plateau lasting for many years.”
The EIA is the most bullish on long-term oil demand, and has predicted a demand peak will come in 2050 while the OPEC Secretariat sees it coming five years earlier. Meanwhile, Standard Chartered has predicted global oil demand will hit 110.2 mb/d in 2030 and increase further to 113.5 mb/d in 2035. However, the commodity experts have not projected a demand peak beyond the end of their modeling horizon in 2035. According to StanChart, a structural long-term peak is very unlikely within 10 years despite a high probability of cyclical downturns over the period. StanChart has argued that the current gulf between demand views creates significant investment uncertainty that’s likely to force longer-term prices higher.
In other words, the energy agencies appear to agree that an oil demand peak is nowhere on the horizon.
