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IEA Faces Backlash Over Bold 2030 Oil Demand Forecast

  • The IEA advocates for a 25% reduction in global fossil fuel demand by 2030 to target net zero by 2050, which is met with skepticism.
  • JPMorgan's Christyan Malek anticipates a "very volatile supercycle" with a potential massive global oil deficit, pushing prices significantly higher.
  • OPEC criticizes the IEA's decarbonization narrative, warning against the dangers of dismissing fossil fuels and the potential for global energy chaos.

The credibility of the International Energy Agency continues to wane as it continues to advocate for an urgent shift towards a decarbonized economy. According to the IEA, global fossil fuel demand must decline 25% by the decade's end to ensure the world is on track for net zero by 2050. However, Christyan Malek, JPMorgan's head of EMEA energy equity research, recently shared a note with clients about an emerging "very volatile supercycle" for fossil fuel, where demand is set to rise through 2030, sparking what he believes could be a massive global oil deficit that will propel prices well into the triple-digit territory through the end of the decade. 

Let's begin with the OECD-funded energy watchdog's latest forecast, which says coal, oil, and natural gas demand must decline by at least a quarter to reduce greenhouse gas emissions and keep the world on track for net zero by the mid-part of the century. At the same time, it argues that the clean energy supply must exponentially rise to avoid shortages and price increases.

The IEA said "stringent and effective policies" under its forecast would "spur clean energy deployment and cut fossil fuel demand by more than 25 percent by 2030 and 80 percent in 2050". 

It forecasted global oil demand will fall by 100 million barrels a day to about 77 million by 2030, adding natural gas demand should slide from 4,150 billion cubic meters in 2022 to 3,400 bcm by the end of the decade. 

IEA said the slide in demand would involve a 75% reduction in energy sector methane emissions by 2030, which would cost an estimated $75 billion or about 2% of the oil and gas industry's net income in 2022. It pointed out "positive developments" in the clean energy space, including rapid adoptions of electric vehicles and solar panels. 

The agency's latest projections come weeks after IEA boss Fatih Birol said, "We are witnessing the beginning of the end of the fossil fuel era, and we have to prepare ourselves for the next era." He noted global oil demand growth will peak before 2030 as the shift to clean energy economies picks up pace. 

Birol's comments were immediately met with a rare rebuke from OPEC, who said: "It is an extremely risky and impractical narrative to dismiss fossil fuels, or to suggest that they are at the beginning of their end."

"In past decades, there were often calls of peak supply, and in more recent ones, peak demand, but evidently neither has materialized. The difference today, and what makes such predictions so dangerous, is that they are often accompanied by calls to stop investing in new oil and gas projects," the cartel said.

OPEC Secretary General Haitham Al Ghais also said the IEA's "narratives only set the global energy system up to fail spectacularly. It would lead to energy chaos on a potentially unprecedented scale, with dire consequences for economies and billions of people across the world." 

IEA has gone from a market observer to a green energy cheerleader and is undoubtedly risking its reputation by pushing climate change narratives. The problem: there's no imminent climate catastrophe, and the world doesn't need to destroy the economy for rapid energy transition. 

In fact, JPM's Malek sees the future much differently than IEA. He said, "Put your seatbelts on. It's going to be a very volatile supercycle." 

The energy guru expects a perfect storm to unfold, where a lack of investment in new oil production, coupled with production cuts from OPEC+, will only lead to much higher prices. 

On top of all this, Malek expects the global oil deficit to hit a record 7mmb/d in 2030, a staggering projection difference from the IEA's. 

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To sum up, the IEA's credibility is at risk by promoting 'green' propaganda (last month, 1,600 scientists said there is no climate emergency).  

By Zerohedge.com

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Leave a comment
  • john tucker on September 28 2023 said:
    yay.

    a breath of fresh air......
  • Mamdouh Salameh on September 28 2023 said:
    The International Energy Agency (IEA) and its chief Fatih Birol have lost all credibility long time ago. Their pontifications on energy matters have proven wrong time and time again. Moreover, their projections on peak oil demand, net-aero emissions and energy transition are based on flawed assumptions and are politically-motivated. They are hell bent on providing information and projections whose ultimate aim is always to help depress prices of oil and gas and also global demand for the benefit of the OECD members the majority of whom are Western consumers of oil and gas. That is why OPEC+ decided four years ago to stop using any IEA energy data.

    Saudi Energy Minister Prince Abdulaziz bin Salman rebuked the IEA and its Chief Fatih Birol a week ago in an energy conference in Calgary, Canada for saying that peak oil demand could arrive by 2030 telling him “that the IEA has moved from being a forecaster and assessor of the market to one practicing political advocacy”.

    The Minister had previously mockingly dismissed Fatih Birol’s call in 2021 for an immediate halt to investments in oil and gas to achieve net-zero emissions by 2050 calling it La-La-Land 2050 roadmap and the nickname has stuck since.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

Leave a comment




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