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OPEC vs. IEA: who to believe on oil demand forecasts?

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By illuminem briefings

· 2 min read

illuminem summarizes for you the essential news of the day. Read the full piece on Forbes or enjoy below:

🗞️ Driving the news: The International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) present differing forecasts for 2024's oil demand growth
The IEA revised its estimate to an increase of 1.28 million barrels per day (bpd), whereas OPEC forecasts a higher growth of 2.25 million bpd
The author argues that although both organisations have their biases, the IEA’s interest in supporting the energy transition may cause it to underestimate the real amount that should be closer to that provided by OPEC whose accuracy is driven by business and profit motives

🔭 The context: Historically, the IEA has frequently revised its oil demand growth estimates upwards, indicating a pattern of initial underestimation
OPEC's forecasts, on the other hand, have been more consistent and are based on anticipated global economic growth
This contrast in forecasting approaches and underlying assumptions fuels the debate over which forecast might be more trustworthy

🌍 Why it matters for the planet: Accurate oil demand predictions are essential for global market stability, influencing investment strategies in both fossil fuels and renewable energies
These forecasts also have significant implications for climate policy and the global energy transition

⏭️ What's next: The accuracy of these contrasting forecasts will be observed as 2024 progresses, impacting global oil markets and environmental strategies
Actual demand patterns will be key in assessing the precision of the IEA's and OPEC's predictions

💬 One quote: "Peak oil demand is not showing up in any reliable and robust short- and medium-term forecasts" (Haitham Al Ghais, OPEC's Secretary General)

📈 One stat: The IEA has missed its initial estimate on the low side in 10 of the past 12 years and according to the author it is on course to make it 11 of 13 years during 2024

Click for more news covering the latest on energy

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