OPEC: IEA estimates regarding oil security are encouraging

Organization of the Petroleum Exporting Countries (OPEC) said on Wednesday that it is encouraged by estimates from the International Energy Agency that highlight the importance of oil security, but the wide discrepancy in the expectations of both sides about demand still persists.

“While the world’s dependence on oil is declining, it remains entrenched, so supply disruptions could still cause significant economic damage,” the International Energy Agency said in estimates published on Monday and written by energy security analyst Ronan Graham and researcher Elias Attegi. “It has a huge negative impact on people’s lives.”

“There is a high degree of uncertainty about how quickly demand will decline, leaving oil companies facing difficult and commercially risky decisions about investing in upstream operations,” the agency added, noting that uncertainty in investment increases the risk of an imbalance between supply and demand.

“At the Organization of the Petroleum Exporting Countries, we are encouraged by this message and reference to the continuing importance of oil to the world,” OPEC said.

She added that the International Energy Agency’s calls not to direct new investments in oil and natural gas “contributed significantly to this state of uncertainty.”

The two sides have very different views regarding estimates of oil demand this year onwards. The International Energy Agency expects demand to peak by 2030, while OPEC oil producers see no peak in their forecasts that extend to 2045.

Nearly 200 countries agreed at the United Nations COP28 climate conference hosted by Dubai in December that the world needs to transition away from fossil fuels.

The International Energy Agency, which represents industrialized countries, says increasing the use of clean energy is the most effective way for governments to enhance energy security.