The reason for the record discrepancy in forecasts between oil producers and consumers has been named

“Each of the parties – the IEA and OPEC – is pulling the blanket over itself”

What will happen to global oil demand this year? The producer group (OPEC) and the International Energy Agency (IEA) have a record difference in forecasts – more than at any time in the last 16 years. In the first case, the final growth rate was set at 1.22 million barrels per day, in the second – 2.25 million bpd. But which of the two scenarios is closer to reality and how will it affect Russia’s export and raw materials positions?

The fact that the difference in estimates turned out to be almost twofold is no coincidence. The reasons are conceptual. OPEC members are the planet’s top oil producers, living off fossil fuel revenues and facing economic consequences as they rapidly phase out the commodity. As for the IEA, which includes 31 states, these are mainly large consumers of energy resources – the USA, Great Britain, and the European Union. Created in 1974 as the energy watchdog for developed countries (responsible for the security of commodity supplies), the IEA has over time shifted its focus to supporting renewable energy sources (RES) and measures to combat global warming.

It turns out that today the two organizations have diametrically opposed interests, as well as visions of the prospects of the global market. The IEA expects oil demand to peak by 2030, followed by an inevitable decline as humanity switches to cleaner fuels. OPEC disagrees: its forecasts until 2045 do not include any peaks. “They (the IEA) have gone from being market forecasters and evaluators to being political propagandists,” Saudi Energy Minister Abdulaziz bin Salman said in September 2023, signaling how incompatible the positions of OPEC and the IEA are.

“The International Energy Agency was created largely in opposition to OPEC, as an alliance of oil consumers,” explains Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation. “Both there and there understand well how important their calculations are for exchange players who rely on these figures when trading oil futures. The OPEC forecast encourages speculators to buy futures now, and if they do so en masse, prices actually shoot up. And in the case of a more moderate IEA estimate, you will have an oversupply, which means lower prices. Exchange players are starting to sell futures while they are still expensive. In general, both organizations strive to influence the market with their forecasts, of course, in the direction they need.”

Well, the truth, most likely, is somewhere in the middle. According to Yushkov, consumption growth is still observed in Asian markets, primarily in India and China. The question is: how long will the dynamics continue, to what extent will these volumes ultimately increase, and also how much will oil production increase in a number of countries that are not part of OPEC+? In particular, we are talking about the USA, Brazil and Guyana. What will end up being more: additional demand or additional supply? Based on these divergent trends, the price will be formed. As for Russia’s interests, they are, of course, fully met by the OPEC scenario, which, in Yushkov’s opinion, is completely feasible. Moreover, the IEA has repeatedly lowered its forecasts for global demand and showed excessive optimism regarding the consumer alliance led by the United States. It is also important that the Chinese economy still needs oil; accordingly, the demand for raw materials will at least not subside.

“In recent years, oil producers have been actively engaged in regulating prices on the world market, creating an artificial shortage of the resource,” says independent financial analyst Boris Usherovich. – In particular, the participants in the OPEC+ deal have already extended the voluntary reduction in production and exports of raw materials several times in a row. This means that their words are listened to. Rumors about a record increase in oil demand of 2.25 million bpd can sow panic on the stock exchange and cause an unhealthy rush. Which, quite expectedly, will lead to an increase in quotes.”

The International Energy Agency, on the contrary, has been calling for quite some time not to believe OPEC forecasts. The organization has traditionally advocated more conservative estimates of supply and demand. Which surprisingly coincides with the interests of the collective West, primarily the United States. In the context of global confrontation, such a gap in positions is quite understandable: each side is “pulling the blanket” over itself. OPEC’s task is to create a rush demand for oil, and the United States can “throw” its own reserves onto the market and bring down the price.

“Although the truth is in the middle, I am more inclined to the position of the IEA,” sums up Usherovich. – At the same time, the scenario proposed by OPEC is more beneficial for Russia. If oil prices begin to grow like an avalanche against this background, then even taking into account the discount that has to be provided for the domestic Urals brand, Russian budget revenues will increase significantly.”