The stakes are remarkably high as forecasts for 2030 oil demand diverge wildly

<p>The IEA was out with its annual energy outlook today, in what's always a big event for oil market.</p><p>I want to focus on 2030 estimates and how they wildly diverge — just over six years from now. That's hardly time to build out the infrastructure for either a world of growing oil use or one of a rapid transition to green energy. It's certainly not enough time to upgrade the grid, let alone secure the raw materials needed like copper.</p><p>In any case, in the IAE's baseline scenario, global oil demand in 2030 is 104.5 million barrels per day, which is up from about 100 million today, and includes 3 million barrels per day of biofuels. </p><p>Compare that to OPEC's latest estimates, which are for 112.0 million barrels per day.</p><p>The 7.5 million barrels per day. Compare that to total US shale output of 9.4 million barrels per day; which has been the only material source of global oil supply growth for the past decade. </p><p>Moreover, in the IEA's announced pledges scenario and in the net zero scenario, demand falls to 97.5 mbpd or 83.7 mbpd by 2030, respectively.</p><p>These forecasts make investment extremely difficult. Keep in mind that around 5 million barrels per day of production needs to be brought online annually just to make up for natural field runoffs. The result is going to be either a feast or famine of energy and the world economy hangs in the balance. OPEC has been able to curb 2-3 million barrels per day but that's about the limit of its abilities. Beyond that, the market will need to balance itself and even small imbalances in oil can lead to catastrophic overshoots in supply/demand.</p><p>Given the impact of technology and government policy, it's not difficult to envision extreme volatility in energy prices in the coming decade as we sort out who is right.</p><p>S&amp;P Global <a href="https://twitter.com/karim__fawaz/status/1716845988428607501" target="_blank" rel="nofollow">highlights </a>that up until last year, the EIA and OPEC were roughly on the same page in terms of demand.</p><p>The Saudis believe there will be shortages:</p><p>"Why would we go to 13 mil b/d if we didn't think there would be demand for it?" said Saudi Prince Abdulaziz yesterday.</p><p>The uncertainty of these forecasts also expands — perhaps even more perilously — to natural gas where they're now warning of a potential glut of LNG as early as 2025. For those investing in projects with 10-year lead times, it makes the field of play extremely </p><p>Here is the<a href="https://iea.blob.core.windows.net/assets/ed1e4c42-5726-4269-b801-97b3d32e117c/WorldEnergyOutlook2023.pdf" target="_blank" rel="nofollow"> full report</a>.</p>

This article was written by Adam Button at www.forexlive.com.