OPEC Sees Slower Growth in China Dimming Near-Term Oil Demand

The Organization of the Petroleum Exporting Countries (OPEC) has cut its global oil demand forecasts for the next four years, citing weaker economic growth in China and faster adoption of electric vehicles in the world’s second-largest economy.

In its latest World Oil Outlook, published Thursday, OPEC said it expects global oil demand to average 105 million barrels per day this year, rising to 106.3 million bpd in 2026.

The revised forecast marks a downward adjustment from last year’s projections, which had anticipated 108 million bpd for 2026. By 2029, demand is now expected to reach 111.6 million bpd, down 700,000 bpd from last year’s estimate.

“This comes on the back of slower economic growth, the faster penetration of EVs and related charging infrastructure, and continued oil substitution in several sectors,” OPEC said, referring to China’s shifting energy mix.

The weaker medium-term outlook comes as OPEC and its allies, including Russia under the OPEC+ alliance, gradually unwind historic production cuts implemented to stabilize the market during the pandemic.

While the group began increasing output in April, with steady hikes through the summer, additional cuts of 3.65 million bpd remain in place until the end of 2026. Analysts note that softer demand could complicate efforts to fully restore production levels over the next two years.

Despite the reduced medium-term projections, OPEC remains optimistic about long-term consumption trends, driven by robust demand in India, the Middle East, and Africa.

The group expects global oil demand to average 113.3 million bpd in 2030, unchanged from last year’s report, and projects demand will reach 122.9 million bpd by 2050, up from 120.1 million bpd estimated in the previous outlook.

“There is no peak oil demand on the horizon,” OPEC Secretary General Haitham Al Ghais wrote in the report’s foreword, pushing back against views from other forecasters that global oil use will decline this decade. Both BP and the International Energy Agency expect oil demand to peak before 2030.

The divergence in forecasts highlights the gap between industrialized nations targeting aggressive decarbonization and developing economies that continue to expand fossil fuel use to meet growing energy needs.

OPEC reiterated its call for increased industry investment, projecting the oil sector will require $18.2 trillion in cumulative spending through 2050, an increase from last year’s estimate of $17.4 trillion, as the group seeks to secure future supply.

The report was released at OPEC’s biennial seminar in Vienna, which convenes oil ministers and energy executives from member states and partner countries.

OPEC has restricted access to the seminar for several major news outlets, including Reuters, but did not provide a reason for the decision.