Peak oil: Experts differ on when demand will reverse

DW (English)

Oil is making a strong comeback as geopolitical agendas shape energy forecasts worldwide. But while the OPEC cartel sees demand rising to 2050 the IEA expects oil peaking by 2030.

Transcript

00:00Drill, baby, drill.

00:04Fossil fuels are making a comeback.

00:06OPEC's latest forecasts suggest global oil demand will keep rising.

00:11But the predictions are more politically driven than ever,

00:14and often contradict each other.

00:16So how much weight should we give them?

00:21Back in 1960, Saudi Arabia, Iraq, Iran, Kuwait, and Venezuela founded OPEC.

00:29The Organization of the Petroleum Exporting Countries.

00:33The goal was clear, coordinate production, and push oil prices higher.

00:43The turning point came during the Yom Kippur War in 1973.

00:49On the holiest Jewish holiday, Egypt and Syria, backed by other Arab nations, attacked Israel.

00:56As a consequence, the Arab members of OPEC imposed an oil embargo.

01:01That was the trigger for the oil crisis, which led, among other things, to empty highways.

01:07Today, OPEC has 12 member countries.

01:10Its goals have changed little, keeping oil prices high and maximizing revenues.

01:15However, OPEC's influence has declined.

01:19That's why it cooperates with countries such as Russia, Mexico, Kazakhstan, and Oman.

01:25In that case, it's referred to as OPEC+.

01:28But let's return to the scenarios for global oil consumption.

01:34Once a year, in February, OPEC publishes its World Oil Outlook.

01:40The organization expects global crude oil demand to rise to 122.9 million barrels per day by 2050.

01:48Only in OECD countries, Western industrialized nations, such as the U.S., Germany, and Japan,

01:57is demand expected to peak in 2030, at around 46 million barrels per day.

02:04From then on, demand will decline.

02:06In China, oil demand is stagnating and will begin to decline slightly from 2045.

02:13OPEC does have a political agenda in that it seeks to be a voice for the global oil industry,

02:21and in particular, the oil producers of its membership, which are in the Global South.

02:26Jeff Colgan is director of the Climate Solutions Lab at Brown University.

02:31He researches the international order in relation to energy and the environment.

02:35Now, however, there's a lot more uncertainty around the future demand of oil,

02:44because so many of the questions that really matter are inherently political,

02:50and they depend on the choices that our political leaders make,

02:55about how fast to decarbonize their own economies.

02:59OPEC's counterpart is the International Energy Agency.

03:0432 industrialized countries are members, and 13 are associated.

03:10It was founded in November 1974 as a response by Western industrialized nations to the oil price crisis.

03:18The goal was to create a counterweight to OPEC.

03:22The International Energy Agency publishes its World Energy Outlook annually with different scenarios.

03:28According to the IEA, global oil demand will peak around 2030 at 102 million barrels per day, and then decline.

03:39That stands in sharp contrast to OPEC's forecast.

03:43The stated policy scenario is based on today's political framework,

03:48and also takes announced initiatives into account.

03:51For the global climate, this means a temperature increase of 2.5 degrees Celsius by the year 2100,

03:59compared to the pre-industrial era.

04:02To what extent is this scenario also political?

04:05The oil industry, oil and gas industry, sees the International Energy Agency as having been captured by the green movement,

04:14or the pro-renewables energy.

04:16And so these basic questions about forecasts of energy,

04:22which used to be strictly technical questions, have now become rather political.

04:27Narendra Taneja, one of India's leading energy experts, goes even further.

04:38So, International Energy Agency's job, it is their job to look at the world,

04:43look at, go for projections, make forecasts, make projections such a way

04:47that is in the best interest of the country,

04:50that a member of the International Energy, member means the founding members.

04:54India is also a associate member,

04:57but International Energy Agency essentially works for the rich countries,

05:02for the rich people, for the rich societies, not for society like mine.

05:06Forecasts change when the political agenda shifts,

05:10for example, in the United States.

05:12The most active oil basin in the world is in Lee County in the U.S. state of New Mexico.

05:18President Trump wants even more oil to be extracted there.

05:22That is why today I will also declare a national energy emergency.

05:27We will drill, baby, drill.

05:32He's issued further decrees to keep oil cheap and demand for fossil fuels high.

05:38That includes simplifying approval procedures for drilling on federal land.

05:42At the same time, he's frozen projects launched under Joe Biden,

05:46such as the Inflation Reduction Act,

05:49the largest climate protection fund in the U.S.,

05:52which earmarks $369 billion for clean energy.

05:56Offshore wind projects have already been suspended.

06:01Columbia University has documented 283 initiatives

06:05introduced by the Trump administration since January 2025

06:09that weaken or slow down climate protection.

06:14Partly, these are policy decisions,

06:16like undoing much of the Biden administration's efforts

06:19to support green industrial policy.

06:22But more fundamentally,

06:24the Trump administration has been attacking the science

06:28and the basic governance institutions in the U.S. government

06:32that have fostered climate policy.

06:35So it's really a two-pronged attack in the United States.

06:40And of course, that has implications

06:41not only for U.S. environmental policy,

06:44but really some ripple effects around the world.

06:47For example, it affects global shipping,

06:50which is particularly harmful to the climate.

06:53For now, there will be no international system

06:56for CO2 pricing and shipping.

06:58It was postponed indefinitely in October 2025,

07:02apparently after pressure from Washington

07:04on other members of the International Maritime Organization.

07:09Companies are also setting different priorities.

07:12In Rotterdam in the Netherlands,

07:14Shell had planned to build a large plant

07:16to produce sustainable aviation fuel.

07:20But the construction has been halted.

07:24Shell says the facility would not be profitable

07:26in the foreseeable future.

07:28Instead, it continues to rely on petroleum.

07:31The signs have changed.

07:37The ramp-up of alternative fuels is taking longer.

07:43Wind farm operators, too, are facing difficulties.

07:47The fact that, say, interest rates continue to be higher today

07:52than they were back in 2020 or 2021

07:56does have real implications for capital-intensive businesses

08:02like solar and wind and batteries.

08:04And so companies like the Danish wind manufacturer,

08:09Ersted, are unfortunately facing

08:12all kinds of headwinds in a negative way,

08:16not just on the political side,

08:18but also on the economics side.

08:20The IEA has responded.

08:23In its current policies scenario,

08:25oil demand continues to rise,

08:28likely even beyond 2050.

08:30The consequence for the global climate,

08:33an increase of 2.9 degrees Celsius

08:35in average global temperature by 2100.

08:39This scenario is meant to reflect current laws and regulations.

08:43It assumes these rules will remain in place until 2050

08:47and that new technologies will spread only very slowly.

08:52Scientists are criticizing the IEA for reintroducing this scenario.

08:56It's a politically motivated scenario.

08:59Rachel Cletus is an economist and senior policy director

09:02at the Union of Concerned Scientists.

09:05Now, in that scenario,

09:07there are a few things that are completely against market trends.

09:09One is, of course, the uptake of things like electric vehicles,

09:14renewable energy technologies like solar and wind,

09:17which are, frankly, the cheapest forms of energy now

09:20in most places in the world.

09:22So the market trends are already driving us

09:24towards these cleanup forms of energy use.

09:29Nevertheless, in the IEA's current policies scenario,

09:33oil demand for cars and trucks remains largely unchanged.

09:37In air travel, demand for oil is increasing.

09:41Shipping remains nearly unchanged,

09:44while petrochemicals show a significant rise in oil consumption.

09:49Oil will continue to be needed as a raw material

09:51in the chemical industry for a long time.

09:54On this point, OPEC, the IEA, and other experts agree.

09:58While the overall trajectory for oil demand is fairly stable,

10:04with a bit of growth in the next five years

10:06and then slow declines over the next couple of decades,

10:10the shift between sectors that will benefit from that demand

10:14is quite stark.

10:18You're moving away from oil utilization in the transportation sector

10:22and much more consumption for petrochemical uses.

10:27Lydia Galerati prepares oil forecasts

10:30for the analysis firm Energy Aspects.

10:33But what role does India play?

10:35One of the fastest-growing countries in the world.

10:39We're in Kashmir, in the city of Srinagar.

10:421.6 million cars are registered here.

10:45In 2008, it was less than half that number.

10:49Still, only one in five families owns a car.

10:53It looks similar in New Delhi.

10:54Across India, 5.2 million vehicles were newly registered in 2024.

11:01That's nearly 37% more than in 2019.

11:06And the vast majority of vehicles in India

11:08have internal combustion engines.

11:11India's strong growth is resulting in a huge appetite for oil.

11:16According to the International Energy Agency,

11:18India's oil demand in 2050 will reach 10.5 million barrels per day

11:24in the current policy scenario,

11:26the scenario in which today's laws remain in place indefinitely.

11:31The other scenario, the stated policy scenario, or STEPS,

11:35projects demand at just under 9 million barrels per day.

11:39This scenario also takes into account political initiatives

11:42that have been announced but not yet enacted into law.

11:46India today is actually driving the global oil market.

11:49If you look at the kind of growth

11:53and you look at the kind of hunger for oil in India,

11:56I think we probably are going to need, say, by 2050,

12:002050 in the life of a nation,

12:02direct tomorrow morning,

12:03something like 9 million barrels of oil every day.

12:07So when will global oil production reach its peak?

12:12Here's a recap.

12:14OPEC assumes that global oil demand

12:16will continue to rise even beyond 2050.

12:21The International Energy Agency,

12:24at least in its stated policy scenario,

12:26expects oil consumption to peak around 2030.

12:31Who's right?

12:33Both are wrong.

12:34You see, International Energy Agency

12:37is an agency of the developed countries.

12:42International energy projection that by 2029,

12:45demand for oil will peak is not scientific.

12:48It's motivated.

12:49So I don't buy it.

12:52However, since renewable energies

12:55have become so much cheaper in recent years,

12:57a peak in oil demand around 2030 is not unrealistic.

13:01The shift, especially towards photovoltaics,

13:05is likely to gain even more momentum soon,

13:08simply because it makes economic sense.

13:12So what do you think?

13:13you

13:14You

13:16We

13:33We

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