Train crash between the two largest energy clubs on the international scene. At stake are the speed of climate change and the financial horizon of the countries (and companies) that for years have squeezed the biggest goose that lays the golden eggs on record: crude oil.
The International Energy Agency (IEA) came out last week with a devastating report on what is to come in the coming years in the oil market: a brutal imbalance between supply and demand, on the back of electrification, with the promise of long-term low prices. And global consumption that will peak before the end of the decade, around 2029, and that Europe will reach well in advance.
It was not the first time that the energy arm of the OECD came to the fore like this. On this occasion, however, he puts words to the music: the excess, he projects, will be around eight million barrels per day due to the push of battery-powered cars, the increase in efficiency in all transportation and the end of use as fuel to generate electricity in the Middle East. A figure only comparable to that of confinement, which the Parisian entity itself describes as “astonishing” and which threatens, and in what way, those who have practiced fossil monoculture for decades: time is running out; The petrodollar machine will soon cease to be what it was.
In presenting the report to the press, the head of the IEA, Fatih Birol, made an effort to try to avoid any controversy with the Organization of Petroleum Exporting Countries (OPEC), with which he has been differing in his forecasts for years. A gap that, in recent times, has become an abyss and that cannot be understood without looking at the composition of both organizations: although there are also large producers within them (the United States, Canada, Mexico or Norway, among others), the Agency represents, above all, the feelings of Western consumers. OPEC, on the other hand, is the historic private preserve of the oil-producing countries of Asia, Africa and Latin America under the leadership of the world’s largest exporter: Saudi Arabia.
Despite this attempt at appeasement ex antethe cartel has taken little time to enter the fray: not even 48 hours had passed when its general secretary, Haitham Al Ghais, was dispatched with a clear headline article —Peak crude oil demand is not on the horizon— and conveniently publicized on the social networks of the Vienna-based organization.
“Some have been promoting theoretical scenarios for some time that decide, before analyzing data, that oil should not be part of a sustainable energy future,” wrote the head of the lobby oil tanker before charging, with first and last name, against his nemesis: “The IEA narrative on crude oil is dangerous, especially for consumers, and could lead to unprecedented volatility.” His hypothesis, although debatable, is simple: investment in exploration and production is at risk, and without it, prices will rise.
OPEC did not stop there: the supposed proximity of peak demand, it said, comes from behind. “The IEA already suggested in 2019 that gasoline consumption would peak in 2019, but in 2023 it has broken record levels and, in fact, continues to grow this year. And he said that coal would reach its maximum in 2014, but today it continues to grow,” the Kuwaiti official insisted. “Hydrocarbons represent more than 80% of the mix global energy today. Instead of adding new energy sources to the mix, contrary to what history says, it focuses on replacing them.”
While the Agency contemplates growing demand – although at an infinitely lower rate than in previous decades – until 2029, when it will begin to fall, the oil cartel projects a sustained acceleration in the short and medium term. “The scenario proposed by the IEA is unreal and a continuation of its anti-oil narrative. “Based on real trends, we do not see a peak in oil demand by the end of the decade,” Al Ghais criticized in his text.
The forecasts of Viktor Katona, head of oil market analysis at the consulting firm Kpler, are closer to those of the IEA than those of OPEC. With some buts: “There are still many pockets of growth around the world, even if the Atlantic basin continues to weigh down consumption,” he says in conversation with EL PAÍS. 2024, he says, is being the year in which “structural biases, both those of OPEC and those of the IEA” have become “too evident to be ignored. “The first says exactly the same thing that an oil producer would say to keep prices high and the second promotes the importers’ agenda,” he maintains.
The poster: “It is an unreal scenario”
This open war between the IEA and OPEC has a reason for being. For consuming countries, a scenario of a drastic reduction in fossil fuel consumption is very tempting. For two reasons: it is the best way to ensure a climate future in which the world escapes the scorching to which it will be exposed if there is not a radical change in trend and, in addition, it would drastically reduce imports of energy products, instantly improving trade balances. from Europe and a good part of Latin America and Asia.
For the oil cartel, on the other hand, its own survival is at stake. After years in which, far from diversifying—as Norway has done, for example—the majority of its members have redoubled their commitment to the extraction of crude oil and natural gas. A maximum risk: the peak of demand arrives or not before 2030, as the Agency foresees, the future of fossils is written. For the good of all.
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