In the 2013 edition of its World Oil Outlook, the Organization of Petroleum Exporting Countries (OPEC) said that it expects the nominal price of its reference basket to average $110 a barrel to 2020 and to rise to a nominal price of $160 a barrel by 2035.
Over the period of the projection (2010 to 2035), OPEC expects global demand to rise to 108.5 million barrels a day by 2035 from 88.9 million barrels a day in 2012, a jump of around 22%.
According to the cartel’s calculations, global supply will reach just 100.2 million barrels a day by 2035, and fossil fuels as a group will continue to supply more than 80% of the world’s energy. Oil’s portion of the world’s supply will fall from 32.2% in 2010 to 26.3% in 2035.
Asia accounts for 88% of demand growth for oil, and by 2035 demand for oil in the developing economies of Asia, including China and India, will reach 94% of the demand from the developed countries of the OECD. Demand from developing countries will surpass OECD demand by 2020, according to OPEC’s outlook.
OPEC forecasts that demand for its own crude will decline from 30.3 million barrels a day this year to 29.2 million barrels by 2018 as North American shale oil production continues to increase. The cartel expects shale oil production to plateau before 2020 and to decline thereafter.
Without putting too fine a point on it, OPEC has never believed that crude production from the North American shale plays would amount to much. The cartel has been wrong consistently on this point, and there is little reason to believe it is right this time either.