OPEC raises concerns over IEA’s fossil fuel projections

Crude oil prices surged past $90 per barrel, highest since November 2022
OPEC raises concerns over IEA’s fossil fuel projections
Oil factory (Photo Credit: Reuters)

The Organization of the Petroleum Exporting Countries (OPEC) has disputed the International Energy Agency’s (IEA) estimate that fossil fuel demand will reach its peak by 2030. OPEC stated that the data-based forecasts do not support the IEA’s projection.

The IEA’s executive director, Fatih Birol, had mentioned in a Financial Times op-ed that the era of continuous growth in fossil fuel demand would come to an end by the end of this decade. He emphasized the implications this would have on the global energy sector and the fight against climate change.

However, OPEC, led by Saudi Arabia, expressed concerns about the projections, particularly the calls to halt new investments in oil and gas that often accompany such estimates. OPEC secretary general, Haitham Al Ghais, warned that these narratives could lead to energy chaos on an unprecedented scale, with severe consequences for economies and billions of people worldwide.

OPEC further argued that the projections failed to consider the ongoing technological advancements in the oil and gas industry aimed at reducing emissions. They also highlighted that fossil fuels still account for 80 percent of the world’s energy mix, the same as three decades ago.

While the IEA acknowledged that fossil fuel demand for each fuel type is expected to peak in the coming years, they emphasized that the decline projected is insufficient to limit global warming to the 1.5-degree Celsius target set under the Paris climate agreement.

OPEC concluded by stating its commitment to addressing the challenges of energy poverty, rising energy demand, and emissions reduction. They emphasized the need for all stakeholders to recognize both short-term and long-term energy realities and not dismiss any energy sources or technologies.

Surging prices

In a recent development, U.S. crude oil prices have surged past $90 a barrel, marking the first time since November 2022. The rise in prices is attributed to growing expectations of a tighter oil supply. West Texas Intermediate (WTI) crude closed the trading session with a 1.9 percent increase at $90.16 (currently trading at $90.61), reaching the highest settlement since November 7, 2022. Similarly, Brent crude settled at $93.70 (trading at $94.10 at the time of writing), reaching a 10-month high with a 2 percent increase.

Read more: OPEC+ cuts to tighten oil market in Q4 2023: IEA

The rise in prices comes despite concerns about weaker economic growth and increasing U.S. crude inventories.

The IEA highlighted that the extension of oil output cuts by Saudi Arabia and Russia until the end of 2023 could lead to a significant supply shortfall in the fourth quarter of this year.

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