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OPEC's Forecast of Peak Oil Demand: A Long Horizon Ahead
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OPEC's latest ‘World Oil Outlook’ paints a bullish picture for oil demand through to 2050, positioning itself as a staunch defender of the idea that oil and gas will remain crucial to global energy.
For market participants, this theory offers a compelling long-term buying opportunity. Investors interested in the sector could benefit from having quality stocks Core Laboratories (CLB - Free Report) , TechnipFMC plc (FTI - Free Report) and Tullow Oil (TUWOY - Free Report) .
Demand Growth in the Foreseeable Future
OPEC firmly believes that the global demand for oil will continue to rise until at least 2050. According to its forecast, demand is expected to grow from 102.2 million barrels per day (bpd) in 2023 to 120.1 million bpd by 2050. This outlook contrasts sharply with predictions from the IEA, which anticipates demand will peak by 2029 at 105.6 million bpd and then decline. The difference in these predictions reflects divergent views on the pace and scale of the energy transition. OPEC argues that phasing out oil is a "fantasy," highlighting the limitations of alternative energy sources in fully replacing oil at scale, a position that aligns with certain investor viewpoints on continued oil relevance.
Renewables and Energy Transition
Renewables are an undeniable force in the energy landscape. While OPEC acknowledges the rapid growth in solar and wind power, it contends that oil will retain the largest share of the global energy mix through mid-century. The World Oil Outlook estimates that oil will still comprise around 29.3% of global energy by 2050, only slightly down from 30.9% today. However, OPEC's forecasts run counter to the broader push for renewables, particularly in developed economies. The IEA, for example, emphasizes the accelerated adoption of electric vehicles and renewable energy, predicting a gradual but inevitable decline in oil consumption. This divergence in outlook reflects a tension between the energy transition and the ongoing demand for fossil fuels in emerging markets, led by countries like India.
Contrasting Supply Projections
On the supply side, OPEC anticipates robust investment in oil production, with $17.5 trillion required to meet future demand. Most of this capital will flow into upstream projects, ensuring that OPEC+ nations maintain a dominant share of global production, rising to 52% by 2050. Non-OPEC+ production, particularly from countries like the United States, is expected to peak by 2030 and then decline as domestic production wanes. This highlights the increasing reliance on OPEC+ for future supply, a dynamic that could create opportunities for investors focused on oil-rich nations and companies that maintain a foothold in these regions.
In contrast, the IEA’s outlook suggests that we may be moving into an era of “post-demand growth,” where supply from alternative energy sources and non-OPEC countries increases, gradually reducing the world’s reliance on oil. This more cautious approach forecasts a world where renewable energy dominates the energy mix, potentially dampening long-term oil prices.
Emerging Markets: New Engine of Oil Growth
A key factor in OPEC's optimism is the growing energy demand from emerging markets. India is projected to be the largest driver of future oil consumption, contributing 8 million bpd of the expected demand increase by 2050. The growth in demand from non-OECD countries, particularly in the petrochemical and transportation sectors, supports OPEC's bullish stance. As developed nations gradually reduce their reliance on fossil fuels, OPEC expects non-OECD markets to offset this decline, keeping oil as a primary energy source for decades.
The Road Ahead
For investors, OPEC's long-term view suggests that oil-focused stocks will remain attractive, particularly in the context of rising demand from emerging markets and steady upstream investments. OPEC’s forecast of sustained demand creates a compelling case for those investing in upstream oil projects and energy firms.
3 Oil/Energy Stocks to Buy
We recommend accumulating stocks like Core Laboratories, TechnipFMC and Tullow Oil. Core Laboratories currently sports a Zacks Rank #1 (Strong Buy), while TechnipFMC and Tullow each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Core Labs: The Zacks Consensus Estimate for Core Labs’ 2024 earnings indicates 18.8% growth. The oil services company has a trailing four-quarter earnings surprise of 3.5% on average.
CLB is valued at around $5.2 billion. Core Labs has seen its shares rise 11.5% in a year.
TechnipFMC: The Zacks Consensus Estimate for TechnipFMC’s 2024 earnings implies 197.8% growth.
The leading oilfield equipment supplier is valued at around $11.4 billion. TechnipFMC has seen its stock surge 43.5% in a year.
Tullow Oil: TUWOY is valued at some $555.2 million. Over the past 30 days, the Zacks Consensus Estimate for 2024 earnings has increased 8.3%.
Tullow Oil enjoys a Value and Growth Score of A and B, respectively, each helping it round out with a VGM Score of A. This Africa-focused hydrocarbon producer and explorer’s shares have dropped 13.5% in a year.
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OPEC's Forecast of Peak Oil Demand: A Long Horizon Ahead
OPEC's latest ‘World Oil Outlook’ paints a bullish picture for oil demand through to 2050, positioning itself as a staunch defender of the idea that oil and gas will remain crucial to global energy.
For market participants, this theory offers a compelling long-term buying opportunity. Investors interested in the sector could benefit from having quality stocks Core Laboratories (CLB - Free Report) , TechnipFMC plc (FTI - Free Report) and Tullow Oil (TUWOY - Free Report) .
Demand Growth in the Foreseeable Future
OPEC firmly believes that the global demand for oil will continue to rise until at least 2050. According to its forecast, demand is expected to grow from 102.2 million barrels per day (bpd) in 2023 to 120.1 million bpd by 2050. This outlook contrasts sharply with predictions from the IEA, which anticipates demand will peak by 2029 at 105.6 million bpd and then decline. The difference in these predictions reflects divergent views on the pace and scale of the energy transition. OPEC argues that phasing out oil is a "fantasy," highlighting the limitations of alternative energy sources in fully replacing oil at scale, a position that aligns with certain investor viewpoints on continued oil relevance.
Renewables and Energy Transition
Renewables are an undeniable force in the energy landscape. While OPEC acknowledges the rapid growth in solar and wind power, it contends that oil will retain the largest share of the global energy mix through mid-century. The World Oil Outlook estimates that oil will still comprise around 29.3% of global energy by 2050, only slightly down from 30.9% today. However, OPEC's forecasts run counter to the broader push for renewables, particularly in developed economies. The IEA, for example, emphasizes the accelerated adoption of electric vehicles and renewable energy, predicting a gradual but inevitable decline in oil consumption. This divergence in outlook reflects a tension between the energy transition and the ongoing demand for fossil fuels in emerging markets, led by countries like India.
Contrasting Supply Projections
On the supply side, OPEC anticipates robust investment in oil production, with $17.5 trillion required to meet future demand. Most of this capital will flow into upstream projects, ensuring that OPEC+ nations maintain a dominant share of global production, rising to 52% by 2050. Non-OPEC+ production, particularly from countries like the United States, is expected to peak by 2030 and then decline as domestic production wanes. This highlights the increasing reliance on OPEC+ for future supply, a dynamic that could create opportunities for investors focused on oil-rich nations and companies that maintain a foothold in these regions.
In contrast, the IEA’s outlook suggests that we may be moving into an era of “post-demand growth,” where supply from alternative energy sources and non-OPEC countries increases, gradually reducing the world’s reliance on oil. This more cautious approach forecasts a world where renewable energy dominates the energy mix, potentially dampening long-term oil prices.
Emerging Markets: New Engine of Oil Growth
A key factor in OPEC's optimism is the growing energy demand from emerging markets. India is projected to be the largest driver of future oil consumption, contributing 8 million bpd of the expected demand increase by 2050. The growth in demand from non-OECD countries, particularly in the petrochemical and transportation sectors, supports OPEC's bullish stance. As developed nations gradually reduce their reliance on fossil fuels, OPEC expects non-OECD markets to offset this decline, keeping oil as a primary energy source for decades.
The Road Ahead
For investors, OPEC's long-term view suggests that oil-focused stocks will remain attractive, particularly in the context of rising demand from emerging markets and steady upstream investments. OPEC’s forecast of sustained demand creates a compelling case for those investing in upstream oil projects and energy firms.
3 Oil/Energy Stocks to Buy
We recommend accumulating stocks like Core Laboratories, TechnipFMC and Tullow Oil. Core Laboratories currently sports a Zacks Rank #1 (Strong Buy), while TechnipFMC and Tullow each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Core Labs: The Zacks Consensus Estimate for Core Labs’ 2024 earnings indicates 18.8% growth. The oil services company has a trailing four-quarter earnings surprise of 3.5% on average.
CLB is valued at around $5.2 billion. Core Labs has seen its shares rise 11.5% in a year.
TechnipFMC: The Zacks Consensus Estimate for TechnipFMC’s 2024 earnings implies 197.8% growth.
The leading oilfield equipment supplier is valued at around $11.4 billion. TechnipFMC has seen its stock surge 43.5% in a year.
Tullow Oil: TUWOY is valued at some $555.2 million. Over the past 30 days, the Zacks Consensus Estimate for 2024 earnings has increased 8.3%.
Tullow Oil enjoys a Value and Growth Score of A and B, respectively, each helping it round out with a VGM Score of A. This Africa-focused hydrocarbon producer and explorer’s shares have dropped 13.5% in a year.