OPEC 2023 World Oil Outlook 2045 PDF

Organization of the Petroleum Exporting Countries 2023 World Oil Outlook 2045 2023 World Oil Outlook 2045 Organization of the Petroleum Exporting Countries Digital access to the WOO: an interactive user experience 24/7 OPEC’s World Oil Outlook (WOO) is part of the Organization’s commitment to market...

Organization of the Petroleum Exporting Countries 2023 World Oil Outlook 2045 2023 World Oil Outlook 2045 Organization of the Petroleum Exporting Countries Digital access to the WOO: an interactive user experience 24/7 OPEC’s World Oil Outlook (WOO) is part of the Organization’s commitment to market stability. The publication is a means to highlight and further the understanding of the many possible future challenges and opportunities for the oil industry. It is also a channel to encourage dialogue, cooperation and transparency between OPEC and other stakeholders within the industry. As part of OPEC’s ongoing efforts to improve user experience of the WOO and provide data transparency, two digital interfaces are available: the OPEC WOO App and the interactive version of the WOO. The OPEC WOO App provides increased access to the publication’s vital analysis and energyrelated data. It is ideal for energy professionals, oil industry stakeholders, policymakers, market analysts, academics and the media. The App’s search engine enables users to easily find information, and its bookmarking function allows them to store and review their favourite articles. Its versatility also allows users to compare graphs and tables interactively, thereby maximizing information extraction and empowering users to undertake their own analysis. The interactive version of the WOO also provides the possibility to download specific data and information, thereby enhancing user experience. Download OPEC WOO App Access the interactive version le ab id l i a A v n d ro A S for nd iO a OPEC is a permanent, intergovernmental organization, established in Baghdad, Iraq, on 10–14 September 1960. The Organization comprises 13 Members: Algeria, Angola, Republic of the Congo, Equatorial Guinea, Gabon, the Islamic Republic of Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the United Arab Emirates and Venezuela. The Organization has its headquarters in Vienna, Austria. © OPEC Secretariat, October 2023 Helferstorferstrasse 17 A-1010 Vienna, Austria www.opec.org ISBN 978-3-9504890-6-4 The data, analysis and any other information (the “information”) contained in the World Oil Outlook (the “WOO”) is for informational purposes only and is neither intended as a substitute for advice from business, finance, investment consultant or other professional; nor is it meant to be a benchmark or input data to a benchmark of any kind. Whilst reasonable efforts have been made to ensure the accuracy of the information contained in the World Oil Outlook, the OPEC Secretariat makes no warranties or representations as to its accuracy, relevance or comprehensiveness, and assumes no liability or responsibility for any inaccuracy, error or omission, or for any loss or damage arising in connection with or attributable to any action or decision taken as a result of using or relying on the information in the World Oil Outlook. The views expressed in the World Oil Outlook are those of the OPEC Secretariat and do not necessarily reflect the views of its governing bodies or Member Countries. The designation of geographical entities in the World Oil Outlook, and the use and presentation of data and other materials, do not imply the expression of any opinion whatsoever on the part of OPEC and/or its Member Countries concerning the legal status of any country, territory or area, or of its authorities, or concerning the exploration, exploitation, refining, marketing and utilization of its petroleum or other energy resources. Full reproduction, copying or transmission of the World Oil Outlook is not permitted in any form or by any means by third parties without the OPEC Secretariat’s written permission, however, the information contained therein may be used and/or reproduced for educational and other non-commercial purposes without the OPEC Secretariat’s prior written permission, provided that it is fully acknowledged as the copyright holder. The World Oil Outlook may contain references to material(s) from third parties, whose copyright must be acknowledged by obtaining necessary authorization from the copyright owner(s). The OPEC Secretariat or its governing bodies shall not be liable or responsible for any unauthorized use of any third party material(s). All rights of the World Oil Outlook shall be reserved to the OPEC Secretariat, as applicable, including every exclusive economic right, in full or per excerpts, with special reference but without limitation, to the right to publish it by press and/or by any communications medium whatsoever; translate, include in a data base, make changes, transform and process for any kind of use, including radio, television or cinema adaptations, as well as a sound-video recording, audio-visual screenplays and electronic processing of any kind and nature whatsoever. Download: All the data presented in this Outlook is available at www.opec.org. Acknowledgements Secretary General, Chairman of the Editorial Board HE Haitham Al Ghais Director, Research Division, Editor-in-Chief Ayed S. Al-Qahtani Head, Energy Studies Department, Editor Abderrezak Benyoucef Main contributors Chapter 1: Key assumptions Mohammad Alkazimi, Joerg Spitzy, Jan Ban, Masudbek Narzibekov, Christian Diendorfer, Julius Walker Chapter 2: Energy demand Haris Aliefendic, Jan Ban, Christian Diendorfer, Reem AlNaeimi, Mohammed Attaba Chapter 3: Oil demand Jan Ban, Mohammed Attaba, Irene Etiobhio Chapter 4: Liquids supply Julius Walker Chapter 5: Refining outlook Haris Aliefendic, Mohammed Attaba Chapter 6: Oil movements Haris Aliefendic, Mohammed Attaba Chapter 7: Climate change and sustainable development and energy policies Eleni Kaditi, Reem AlNaeimi, Julius Walker, Boris Kudashev, Daniel McKirdy, Mohammed Attaba, Irene Etiobhio Chapter 8: Energy scenarios Jan Ban, Julius Walker, Eleni Kaditi Other contributors Behrooz Baikalizadeh, Huda Almwasawy, Mohammad Hassani, Mhammed Mouraia, Mohamed Sarrab, Yacine Sariahmed, Sulaiman Saad, Ali Dehghan, Aziz Yahyai, Pantelis Christodoulides Klaus Stoeger, Mohammad Sattar, Mihni Mihnev, Justinas Pelenis Editorial Team James Griffin, Richard Murphy Design & Production Team Carola Bayer, Andrea Birnbach, Lorenz Konzett Editorial Support Daniel McKirdy, Mai Salama OPEC’s Economic Commission Board (as of September 2023) Samir Madani, Gaspar Sermao, Antimo Asangono, Fernand Epigat, Afshin Javan, Mohammed Al-Najjar, Abdullah Al Sabah, Abdulnasser Gnedi, Mele Kyari, Yousef Al Salem, Salem Al Mehairi, Ronny Romero Contents FOREWORD 1 EXECUTIVE SUMMARY 5 INTRODUCTION 13 CHAPTER 1 KEY ASSUMPTIONS 17 CHAPTER 2 ENERGY DEMAND 47 CHAPTER 3 OIL DEMAND 87 1.1 1.2 1.3 1.4 2.1 2.2 2.3 2.4 2.5 3.1 3.2 3.3 Population and demographics Economic growth Energy policies Technology and innovation Major trends in energy demand Energy demand by major regions Energy demand by fuel Energy related CO2 emissions Energy intensity and consumption per capita Oil demand outlook by region Oil demand outlook by sector Oil demand outlook by product 18 23 35 39 48 52 59 77 81 89 108 131 CHAPTER 4 LIQUIDS SUPPLY 137 CHAPTER 5 REFINING OUTLOOK 165 4.1 4.2 4.3 4.4 4.5 4.6 5.1 5.2 5.3 5.4 5.5 Global liquids supply outlook Drivers of medium-term and long-term liquids supply Breakdown of liquids supply outlook by main regions Breakdown of liquids supply by type of liquids OPEC liquids Upstream investment requirements Existing refinery capacity Distillation capacity outlook Secondary capacity Investment requirements Refining industry implications 138 138 141 155 160 160 166 171 193 203 204 CHAPTER 6 OIL MOVEMENTS 207 CHAPTER 7 CLIMATE CHANGE, SUSTAINABLE DEVELOPMENT AND ENERGY POLICIES 229 CHAPTER 8 ENERGY SCENARIOS 251 Annex A 265 Annex B 269 Annex C 273 Annex D 277 6.1 6.2 6.3 6.4 7.1 7.2 8.1 8.2 8.3 Logistics developments Oil movements Crude oil and condensate movements Refined product movements Climate change and sustainable development Energy policies of major economies Alternative energy scenarios Energy demand and the energy mix Oil demand Abbreviations OPEC World Energy: regional definitions World Oil Refining Logistics and Demand: regional definitions Major data sources 208 211 215 226 230 238 253 254 260 List of tables Table 1.1 Table 1.2 Table 1.3 Table 1.4 Table 1.5 Table 2.1 Table 2.2 Table 2.3 Table 2.4 Table 2.5 Table 2.6 Table 2.7 Table 2.8 Table 2.9 Table 2.10 Table 2.11 Table 2.12 Table 2.13 Table 3.1 Table 3.2 Table 3.3 Table 3.4 Table 3.5 Table 3.6 Table 3.7 Table 3.8 Table 3.9 Table 3.10 Table 3.11 Table 3.12 Table 3.13 Table 3.14 Table 3.15 Table 4.1 Table 4.2 Table 4.3 Table 5.1 Table 5.2 Table 5.3 Table 5.4 Table 5.5 Table 5.6 Table 5.7 Table 5.8 Population by region Working population (age 15–64) by region Net migration by region Medium–term annual real GDP growth rate Long–term annual real GDP growth rate World primary energy demand by fuel type, 2022–2045 Total primary energy demand by region, 2022–2045 OECD primary energy demand by fuel type, 2022–2045 Non-OECD primary energy demand by fuel type, 2022–2045 China primary energy demand by fuel type, 2022–2045 India primary energy demand by fuel type, 2022–2045 Oil demand by region, 2022–2045 Coal demand by region, 2022–2045 Natural gas demand by region, 2022–2045 Nuclear demand by region, 2022–2045 Hydro demand by region, 2022–2045 Biomass demand by region, 2022–2045 'Other renewables' demand by region, 2022–2045 Medium-term oil demand in the Reference Case Long-term oil demand by region Sectoral oil demand, 2022–2045 Number of passenger cars, 2022–2045 Number of commercial vehicles, 2022–2045 Number of electric vehicles, 2022–2045 Oil demand in the road transportation sector by region, 2022–2045 Oil demand in the aviation sector by region, 2022–2045 Oil demand in the petrochemical sector by region, 2022–2045 Oil demand in the residential/commercial/agricultural sector by region, 2022–2045 Oil demand in the marine bunkers sector by region, 2022–2045 Oil demand in the ‘other industry’ sector by region, 2022–2045 Oil demand in the rail and domestic waterways sector by region, 2022–2045 Oil demand in the electricity generation sector by region, 2022–2045 Global oil demand by product, 2022–2045 Long-term global liquids supply outlook US total liquids supply in the long-term Long-term global non-crude liquids supply outlook Assessed available base capacity as of January 2023 Distillation capacity additions from existing projects by region, 2023–2028 Refinery distillation capacity additions by period Crude unit throughputs and utilization rates, 2022–2045 Net refinery closures by region, recent and projected Secondary capacity additions from existing projects, 2023–2028 Global capacity requirements by process, 2023–2045 Global cumulative potential for incremental product output, 2023–2028 19 20 22 25 31 49 51 53 54 57 58 60 64 67 70 72 73 77 90 91 108 113 114 116 118 121 122 126 127 129 129 130 131 141 143 159 169 173 175 188 191 194 196 202 List of figures Figure 1.1 Figure 1.2 Figure 1.3 Figure 1.4 Figure 1.5 Figure 1.6 Figure 1.7 Figure 2.1 Figure 2.2 Figure 2.3 Figure 2.4 Figure 2.5 Figure 2.6 Figure 2.7 Figure 2.8 Figure 2.9 Figure 2.10 Figure 2.11 Figure 2.12 Figure 2.13 Figure 2.14 Figure 2.15 Figure 2.16 Figure 2.17 Figure 2.18 Figure 2.19 Figure 2.20 Figure 2.21 Figure 2.22 Figure 3.1 Figure 3.2 Figure 3.3 Figure 3.4 Figure 3.5 Figure 3.6 Figure 3.7 Figure 3.8 Figure 3.9 Figure 3.10 Figure 3.11 Figure 3.12 Figure 3.13 Figure 3.14 Figure 3.15 Figure 3.16 Figure 3.17 World population growth, 1998–2022 versus 2022–2045 World population trends, 1990–2045 Urbanization rate for selected regions, 2000–2045 Long–term GDP growth rates by components, 2022–2045 Size of major economies, 2015–2045 Distribution of the global economy, 2022 and 2045 Real GDP per capita in 2022 and 2045 Growth in primary energy demand by fuel type, 2022–2045 Growth in primary energy demand by region, 2022–2045 Energy mix in OECD and non-OECD and primary energy demand, 2022–2045 Growth in energy demand by fuel type and region, 2022–2045 Oil demand by region, 2022–2045 Incremental oil demand by region, 2022–2045 Coal-fired generation and share in the global generation mix Coal demand by major region, 2022–2045 Natural gas demand by region, 2022–2045 Nuclear net electrical capacity and electricity supplied Nuclear net electrical capacity by age Nuclear energy demand by region, 2022–2045 Hydro demand by region, 2022–2045 Biomass demand by region, 2022–2045 'Other renewables' demand by region, 2022–2045 Annual change in energy related CO2 emissions, 1950–2045 Energy-related annual CO2 emissions by region, 2022–2045 Per capita CO2 emissions by region, 2022 and 2045 Cumulative CO2 emissions since 1900, 1990–2045 Evolution and projections of energy intensity in major world regions, 1990–2045 Average annual rate of improvement in global and regional energy intensity, 2022–2045 Energy consumption per capita versus GDP at PPP per capita, 2022–2045 Incremental oil demand by region, 2022–2028 Average annual oil demand increments by region, 2022–2045 Annual oil demand growth in the OECD, 2022–2028 OECD oil demand by sector, 2022–2045 OECD oil demand by product, 2022–2045 Annual oil demand growth in non-OECD countries, 2022–2028 Non-OECD regional oil demand growth, 2022–2028 Non-OECD regional oil demand growth, 2028–2045 Non-OECD oil demand by sector, 2022–2045 Oil demand in India by sector, 2022 and 2045 Oil demand in India by product, 2022–2045 Oil demand in China by product, 2022–2045 Oil demand in China by sector, 2022–2045 Oil demand in ‘Other Asia’ by sector, 2022–2045 Oil demand in the Middle East by sector, 2022–2045 Oil demand growth by sector, 2022–2045 Sectoral oil demand in non-OECD countries, 2022 and 2045 19 20 21 29 34 34 35 50 52 56 59 61 62 63 64 67 69 69 70 72 74 76 78 79 80 80 81 82 83 90 92 93 94 96 97 97 98 99 100 101 103 104 106 107 109 111 Figure 3.18 Figure 3.19 Figure 3.20 Figure 3.21 Figure 3.22 Figure 4.1 Figure 4.2 Figure 4.3 Figure 4.4 Figure 4.5 Figure 4.6 Figure 4.7 Figure 4.8 Figure 4.9 Figure 4.10 Figure 4.11 Figure 4.12 Figure 4.13 Figure 4.14 Figure 4.15 Figure 4.16 Figure 4.17 Figure 4.18 Figure 4.19 Figure 4.20 Figure 4.21 Figure 4.22 Figure 4.23 Figure 4.24 Figure 4.25 Figure 4.26 Figure 5.1 Figure 5.2 Figure 5.3 Figure 5.4 Figure 5.5 Figure 5.6 Figure 5.7 Figure 5.8 Figure 5.9 Figure 5.10 Figure 5.11 Figure 5.12 Figure 5.13 Figure 5.14 Figure 5.15 Figure 5.16 Figure 5.17 Global fleet composition, 2022–2045 Oil demand in the aviation sector, 2022–2028 Regional demand in the petrochemical sector by product, 2022–2045 Demand growth by product category between 2022 and 2045 Growth in global oil demand by product Long-term non-OPEC liquids supply outlook Composition of global liquids supply growth Select contributors to non-OPEC total liquids change, 2022–2028 Global upstream (oil only) capital expenditure Non-OPEC liquids supply outlook by region US total liquids supply outlook Canada total liquids supply outlook Mexico total liquids supply outlook Norway total liquids supply outlook UK total liquids supply outlook Brazil total liquids supply outlook Argentina total liquids supply outlook Guyana total liquids supply outlook Colombia total liquids supply outlook Africa total liquids supply outlook Russia total liquids supply outlook Kazakhstan total liquids supply outlook China total liquids supply outlook Non-OPEC liquids supply outlook by type Tight oil supply breakdown US tight crude oil supply by major producing basin US producer cost composite index (January 2010 = 100) US tight oil breakdown OPEC total liquids supply outlook Annual upstream investment requirements, 2023–2045 Cumulative oil-related investment requirements by segment, 2023–2045 Refinery throughputs, indexed to 2019 Secondary capacity relative to distillation capacity, January 2023 Annual distillation capacity additions and total project investment Distillation capacity additions from existing projects, 2023–2028 Distillation capacity additions and oil demand growth, 2023–2045 Crude distillation capacity additions, 2023–2045 Additional global cumulative refinery crude runs, potential and required Additional cumulative crude runs in US & Canada, potential and required Additional cumulative crude runs in Europe, potential and required Additional cumulative crude runs in China, potential and required Additional cumulative crude runs in Asia-Pacific (excl. China), potential and required Additional cumulative crude runs in the Middle East, potential and required Additional cumulative crude runs in the Russia & Caspian, potential and required Additional cumulative crude runs in Africa, potential and required Additional cumulative crude runs in Latin America, potential and required Net cumulative regional refining potential surplus/deficits versus requirements Historical and projected global refinery utilization, 2019–2028 117 119 124 132 133 138 139 139 140 142 143 145 145 146 147 148 149 150 151 152 153 154 154 155 156 157 157 158 160 161 161 167 170 172 174 176 177 179 180 181 182 182 183 184 184 185 185 186 Figure 5.18 Figure 5.19 Figure 5.20 Figure 5.21 Figure 5.22 Figure 5.23 Figure 5.24 Figure 5.25 Figure 5.26 Figure 5.27 Figure 6.1 Figure 6.2 Figure 6.3 Figure 6.4 Figure 6.5 Figure 6.6 Figure 6.7 Figure 6.8 Figure 6.9 Figure 6.10 Figure 6.11 Figure 6.12 Figure 6.13 Figure 6.14 Figure 6.15 Figure 8.1 Figure 8.2 Figure 8.3 Figure 8.4 Figure 8.5 Figure 8.6 Figure 8.7 Figure 8.8 Figure 8.9 Figure 8.10 Global oil demand, refining capacity and crude runs, 1980–2028 187 Refinery closures by region, recent and projected 191 Conversion projects by region, 2023–2028 195 Global capacity requirements by process type, 2023–2045 197 Conversion capacity requirements by region, 2023–2045 198 Desulphurization capacity requirements by region, 2023–2045 199 Desulphurization capacity requirements by product and region, 2023–2045 200 Octane capacity requirements by process and region, 2023–2045 201 Expected surplus/deficit of incremental product output from existing refining projects, 2023–2028 202 Refinery investments by region, 2023–2045 203 Interregional crude oil, condensate and products exports, 2022–2045 214 Change in crude, condensate and synthetic crude supply between 2022 and 2045 215 Global average API gravity and sulphur content 216 Global crude and condensate exports by origin, 2022–2045 217 Share of Middle East and Asia-Pacific in global crude and condensate trade, 2022–2045 218 Crude and condensate exports from the Middle East by major destination, 2022–2045 219 Crude and condensate exports from Latin America by major destination, 2022–2045 219 Crude and condensate exports from Russia & Caspian by major destination, 2022–2045 220 Crude and condensate exports from Africa by major destination, 2022–2045 221 Crude and condensate exports from US & Canada by major destination, 2022–2045 222 Crude and condensate imports to the US & Canada by origin, 2022–2045 223 Crude and condensate imports to Europe by origin, 2022–2045 224 Crude and condensate imports to Asia-Pacific by origin, 2022–2045 225 Regional net crude and condensate imports, 2022, 2025, 2035 and 2045 226 Regional net product imports, 2025, 2035 and 2045 227 Global primary energy demand in the Reference Case and in alternative scenarios, 2030 254 Global primary energy demand in the Reference Case and in alternative scenarios, 2045 255 Global primary energy demand in the Reference Case and in alternative scenarios, 2020–2045 255 Change in primary energy demand between the Advanced Technology Scenario and the Reference Case in 2045 256 Global energy demand by sector in the Reference Case and Advanced Technology Scenario, 2030 and 2045 257 Change in the primary energy demand between the Laissez-Faire Scenario and the Reference Case in 2045 258 Global primary energy demand by sector in the Reference Case and Laissez-Faire Scenario, 2030 and 2045 259 Global energy system in the Reference Case and in alternative scenarios, 2020–2045 260 Global oil demand in the Reference Case and in alternative scenarios, 2022–2045 261 OECD and non-OECD oil demand by scenario, 2022–2045 262 FOREWORD Foreword 2 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries FOREWORD Over the past year, we have witnessed a significant shift in the narrative related to energy transitions and the intertwined issues of energy security, energy availability and the need to reduce emissions. Governments and political parties are reevaluating their sustainable energy pathways, taking into account the realities on the ground and the views of populations. There has been pushback against the opinion that the world should see the back of fossil fuels, as policies and targets for other energies falter due to costs and a more nuanced understanding of the scale of the energy challenges. Moreover, we are now seeing more focus on the capacities and national circumstances of all countries in the energy transitions agenda, not just a select few. These were evidently on display at the 8th OPEC International Seminar, held in early July in Vienna, with a focus on the need for all energy sources, all relevant technologies and unprecedented investment, collaboration and support. At OPEC, we believe that the future needs to see energy transition pathways that strive for an inclusive ‘all-peoples, all-fuels and all-technologies’ approach. We need to follow sustainable paths that enable economic growth, enhance social mobility, boost energy access, and reduce emissions at the same time. These issues are part of the thinking and analysis that form the backbone of this year’s World Oil Outlook (WOO), as the Organization looks to share its data-driven views on how the future energy landscape may evolve, ones that offer some differing perspectives compared to past editions. What is clear is that the world will continue to need more energy in the decades to come as populations expand, economies grow, and given the pressing need to bring modern energy services to those who continue to go without. In this year’s WOO, global energy demand is seen expanding by 23% in the period to 2045, or on average by around 3 million barrels of oil equivalent a day every year. The only way this can be realized is through huge investments in all energies. Recent developments have led the OPEC team to reassess just what each energy can deliver, with a focus on pragmatic and realistic options and solutions. In this regard, our Reference Case sees oil demand reaching 116 million barrels a day (mb/d) by 2045, around 6 mb/d higher than in the WOO 2022, and with the potential to be even higher. For this to be achieved, oil sector investment requirements out to 2045 total $14 trillion, or around $610 billion on average per year. It is vital that these are made; it is beneficial for both producers and consumers. Calls to stop investments in new oil projects are misguided and could lead to energy and economic chaos. History is replete with numerous examples of turmoil that should serve as a warning for what occurs when policymakers fail to acknowledge energy’s interwoven complexities. While the world needs more energy, alongside this there is also the need to continually reduce emissions, subscribing to global best practices and cutting edge, best-in-class technologies. For example, carbon capture utilization and storage, direct air capture, clean hydrogen technologies, the circular carbon economy, and others. These form part of the WOO’s spotlight on technologies that should play a key role going forward. World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 1 F FOREWORD The platform for building a sustainable energy future for all also comes from stability in energy markets, which remains the core focus of OPEC and its partners in the Declaration of Cooperation. The continued proactive, preemptive and multilateral approach to balanced and stable markets and the voluntary production adjustments have proven beneficial over the past year. It will continue to be a guiding principle in the years to come. Nonetheless, the future requires all industry stakeholders to work together, no-one can work alone. Collaboration needs to be based on the realities we see before us, to ensure a long-term investment-friendly climate for all energies. In putting together this year’s WOO, I would like to thank all those involved: management, analysts, editors, designers and all others that played a role. The OPEC team should be proud of this achievement, which is central to the Organization’s embrace of transparency through dialogue and cooperation. We are excited to introduce the WOO 2023 to our valued readership. We believe it offers a forwardthinking approach and a visionary blueprint to help meet energy security concerns, lessen energy poverty and reduce emissions. We look forward to any feedback you may have. Haitham Al Ghais Secretary General 2 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries FOREWORD F World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 3 EXECUTIVE SUMMARY Executive Summary 4 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries EXECUTIVE SUMMARY Balanced energy policies and innovative technologies are key to a sustainable future Sustainable energy and economic prosperity for all requires the use of all sources of energy and the deployment of all relevant technologies with unprecedented levels of investment and collaboration. Recent shifts and the re-consideration of energy transition policies and targets by governments across the world are placing greater emphasis on energy security. This outlook takes all these recent developments into account to provide a forward thinking and realistic outlook, that is based on a scientific approach and hard data. This outlook takes a relatively conservative approach as it assumes that already-enacted, let alone announced energy policies, will be comprehensively implemented. Population growth drives energy demand requirements Global population is expected to expand by around 1.5 billion from nearly eight billion in 2022 to about 9.5 billion by 2045. This will be driven by strong population growth in the Middle East & Africa and Other Asia. The global working-age population (aged between 15–64) is set to increase globally by 826 million over the forecast period, while the global urbanization rate is anticipated to rise from 57% in 2022 to 66% by 2045. World population trends, 1990–2045 millions 2,500 OECD India OPEC 2,000 Latin America China Rest of the World Middle East & Africa Other Asia 1,500 1,000 500 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 Source: OPEC. Average global economic growth is seen at 3% p.a. over the long-term Global economic growth is expected to average 3% per annum (p.a.) over the forecast period. Thus, over the entire outlook, global GDP is set to almost double from $138 trillion in 2022 to Long-term annual real GDP growth rate OECD Americas OECD Europe OECD Asia-Pacific OECD Latin America Middle East & Africa India China Other Asia OPEC Russia Other Eurasia Non-OECD World 2022–2028 1.5 1.4 1.3 1.5 1.9 3.1 6.1 4.9 4.3 3.0 1.0 2.5 4.1 3.0 % p.a. 2028–2035 2.2 1.5 1.3 1.8 2.2 3.9 6.3 4.2 4.1 3.1 1.4 2.5 4.1 3.1 2035–2045 2.2 1.1 1.1 1.6 1.8 4.5 5.9 3.0 3.0 3.2 1.2 2.3 3.5 2.8 2022–2045 2.0 1.3 1.2 1.6 1.9 4.0 6.1 3.8 3.7 3.1 1.2 2.4 3.8 3.0 Source: OPEC. World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 5 ES EXECUTIVE SUMMARY $270 trillion in 2045 (on a 2017 PPP basis). With average long-term growth of 6.1% p.a., India is expected to remain the fastest-growing major developing country. China and India alone are set to account for more than a third of the global economy in 2045. Global primary energy demand to increase by 23% to 2045, driven by non-OECD Global primary energy demand is set to increase from around 291 million barrels of oil equivalent per day (mboe/d) in 2022 to close to 359 mboe/d in 2045, an increase of 68.3 mboe/d, or 23% over the outlook period. Growth is expected to slow gradually from the relatively high short-term rates to more modest long-term increments, in line with moderating population and economic growth. Energy demand growth will be driven by the non-OECD region, which is set to increase by 69 mboe/d over the outlook period. Around 28% of nonOECD growth is expected to come from India alone. At the same time, energy demand in OECD countries is set to marginally decline in the outlook period. Total primary energy demand by region, 2022–2045 2022 OECD Americas OECD Europe OECD Asia-Pacific OECD China India OPEC Other DCs Russia Other Eurasia Non-OECD World 2025 Levels Growth Growth Share mboe/d mboe/d % p.a. % 2022–2045 2022–2045 2022 2045 0.5 –1.7 0.5 –0.7 6.1 19.3 14.4 26.8 –0.5 2.9 69.0 68.3 0.0 –0.2 0.1 0.0 0.4 3.1 2.4 1.9 –0.1 1.4 1.4 0.9 19.0 11.6 6.0 36.7 24.5 6.6 7.0 17.3 5.4 2.6 63.3 100.0 15.6 8.9 5.0 29.5 21.6 10.7 9.7 21.5 4.2 2.9 70.5 100.0 2030 2035 2040 2045 55.4 55.4 56.4 56.6 56.4 55.9 33.7 34.0 33.9 33.4 32.7 32.0 17.5 17.7 17.9 18.0 18.0 18.0 106.6 107.1 108.2 108.0 107.1 105.9 71.3 75.2 78.1 78.7 78.1 77.4 19.2 21.3 25.4 29.7 34.1 38.5 20.3 22.8 26.4 29.6 32.6 34.7 50.3 54.2 61.1 68.2 75.0 77.1 15.7 15.5 15.4 15.3 15.2 15.2 7.5 7.8 8.3 8.9 9.5 10.4 184.3 196.8 214.7 230.3 244.5 253.3 290.9 303.9 322.9 338.3 351.6 359.2 Source: OPEC. Wind and solar grow at the fastest rate; oil retains the largest share in the energy mix Demand for all primary fuels is set to increase in the long-term, with the exception of coal due to energy policy and climate commitments. The strongest growth is expected for other renewables (notably wind and solar), which will increase by 34.3 mboe/d, based on strong World primary energy demand by fuel type, 2022–2045 Oil Coal Gas Nuclear Hydro Biomass* Other renewables** Total Levels Growth Growth Fuel share mboe/d mboe/d % p.a. % 2022 2025 2030 2035 2040 2045 2022–2045 2022–2045 90.7 75.9 67.1 15.0 7.7 26.6 7.9 290.9 96.4 74.6 69.6 15.9 8.2 27.9 11.2 303.9 102.0 71.1 75.0 17.4 8.9 30.2 18.5 322.9 104.3 65.9 80.2 19.4 9.6 32.3 26.7 338.3 105.3 60.0 84.4 21.7 10.2 34.1 35.8 351.6 106.1 54.4 87.0 23.8 10.5 35.2 42.2 359.2 15.4 –21.5 20.0 8.8 2.8 8.6 34.3 68.3 0.7 –1.4 1.1 2.0 1.3 1.2 7.5 0.9 * Biomass includes solid biomass, waste, biogas, biofuels and charcoal. ** Other renewables include wind, solar, geothermal and tidal energy. Source: OPEC. 6 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 2022 2045 31.2 29.5 26.1 15.1 23.1 24.2 5.2 6.6 2.7 2.9 9.1 9.8 2.7 11.7 100.0 100.0 EXECUTIVE SUMMARY policy support in many regions. The share of other renewables in the energy mix is set to rise from around 2.7% in 2022 to 11.7% in 2045. Oil demand will grow strongly too, and even though its share in the energy mix declines modestly, oil will remain the fuel with the largest share by 2045 at 29.5%. Natural gas demand is set to increase by 20 mboe/d over the outlook period, reaching 87 mboe/d in 2045. The share of fossil fuels in the energy mix will drop from above 80% in 2022 to about 69% in 2045, due to the decline of coal. In the same period, the combined share of oil and gas in the energy mix still represents 54% in 2045. Oil demand shows strong medium-term growth; long-term oil demand rises to 116 mb/d by 2045 Global oil demand is set to reach a level of 110.2 million barrels a day (mb/d) in 2028, representing an increase of 10.6 mb/d compared to 2022. Non-OECD oil demand is expected to increase by a robust 10.1 mb/d, reaching a level of 63.7 mb/d by 2028. OECD demand will also increase by 0.5 mb/d over the medium-term. In the long-term, global oil demand is expected to increase by more than 16 mb/d between 2022 and 2045, rising from 99.6 mb/d in 2022 to 116 mb/d in 2045. Non-OECD oil demand is expected to increase by almost 26 mb/d between 2022 and 2045. In contrast, OECD oil demand is set to contract by around 9.3 mb/d. Long-term oil demand by region OECD Americas OECD Europe OECD Asia-Pacific OECD China India Other Asia Latin America Middle East Africa Russia Other Eurasia Other Europe Non-OECD World 2022 25.0 13.5 7.4 45.9 14.9 5.1 9.0 6.4 8.3 4.4 3.6 1.2 0.8 53.6 99.6 mb/d 2025 25.5 13.5 7.5 46.5 16.8 5.9 9.9 6.9 9.4 4.9 3.8 1.2 0.8 59.6 106.1 2030 25.8 13.1 7.2 46.0 17.8 7.3 11.1 7.8 10.0 5.9 4.0 1.3 0.9 66.0 112.0 2035 24.8 12.0 6.6 43.4 18.2 8.8 12.1 8.4 10.7 6.6 4.0 1.4 0.9 71.0 114.4 2040 23.2 10.8 6.0 40.0 18.5 10.2 12.9 8.7 11.4 7.4 3.9 1.5 0.8 75.4 115.4 2045 21.5 9.8 5.4 36.7 18.8 11.7 13.6 9.0 11.9 8.2 3.9 1.5 0.8 79.4 116.0 Growth 2022–2045 –3.5 –3.7 –2.0 –9.3 4.0 6.6 4.6 2.5 3.6 3.8 0.3 0.3 0.0 25.7 16.4 Source: OPEC. India leads in driving oil demand growth The largest contributions to the non-OECD oil demand increase are set to come from India, Other Asia, China, Africa and the Middle East. India will add 6.6 mb/d to oil demand over the forecast period. Other Asia’s oil demand is set to increase by 4.6 mb/d, China’s by 4 mb/d, Africa’s by 3.8 mb/d and the Middle East’s by 3.6 mb/d. Road transport, petrochemicals and aviation are key to oil demand growth The largest incremental demand over the forecast period is projected for the road transportation, petrochemical and aviation sectors. Oil demand in these sectors is set to increase by 4.6 mb/d, 4.3 mb/d and 4.1 mb/d, respectively. With respect to refined products, major long-term demand growth is expected for jet/kerosene (4 mb/d) followed by ethane/liquefied petroleum gas (3.6 mb/d), diesel/gasoil (3.1 mb/d), naphtha (2.5 mb/d) and gasoline (2.5 mb/d). World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 7 ES EXECUTIVE SUMMARY Oil demand growth by sector, 2022–2045 120 mb/d 115 110 Other 1.1 Aviation 4.1 105 Other industry 1.5 Petrochemicals 4.3 Resid./ Comm./Agr. 1.6 Electricity gen. –0.8 116.0 Road 4.6 100 95 99.6 90 Demand in 2022 Growth in transportation Growth in industry Growth in other sectors Demand in 2045 Source: OPEC. Strong medium-term non-OPEC liquids supply growth, led by the US Non-OPEC liquids supply is expected to grow from 65.8 mb/d in 2022 to 72.7 mb/d in 2028, or by almost 7 mb/d. Incremental supply in the US makes up nearly half of this, at 3.4 mb/d, with other major drivers being Brazil, Guyana, Canada, Qatar and Norway. With US liquids supply set to peak around the end of the current decade, overall non-OPEC production starts declining from the early 2030s, eventually falling to 69.9 mb/d by 2045. Guyana, Canada, Argentina, Brazil and Kazakhstan are some of the few non-OPEC producers set to expand beyond the medium-term, but non-crude liquids including biofuels and other unconventionals will also keep increasing. Composition of global liquids supply growth mb/d 120 115 110 105 100 95 90 85 80 Supply in 2022 Non-OPEC liquids growth OPEC liquids growth Supply in 2045 Source: OPEC. OPEC’s share of global liquids supply rises from 34% in 2022 to 40% in 2045 OPEC liquids will rise steadily in the medium-term from 34.2 mb/d in 2022 to 37.7 mb/d, and further to 46.1 mb/d by 2045. Thus, OPEC’s share of global liquids supply will increase from 34% in 2022 to 40% in 2045. 8 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries EXECUTIVE SUMMARY OPEC total liquids supply outlook mb/d 49 47 45 43 41 39 37 35 33 31 29 27 ES 2020 2025 2030 2035 2040 2045 Source: OPEC. Oil investment requirements total $14 trillion by 2045 Investment requirements for the overall oil sector, between 2022 and 2045, are estimated at a cumulative $14 trillion (in 2023 $US), or around $610 billion p.a. on average. Of this, $11.1 trillion is expected to be required in the upstream sector, or an average of $480 billion p.a. Downstream and midstream requirements are estimated at $1.7 and $1.2 trillion, respectively. If these investments do not materialize, it represents a considerable challenge and risk to market stability and energy security. Cumulative oil-related investment requirements by segment, 2023–2045 $(2023) trillion 1.2 1.7 Upstream Downstream Midstream 11.1 Source: OPEC. Asia-Pacific, Middle East & Africa drive medium-term refinery expansions Around 6.6 mb/d of refining capacity additions are projected between 2022 and 2028. Most of this new capacity will be in the Asia-Pacific (3.1 mb/d), Middle East (1.6 mb/d) and Africa (1.2 mb/d). Additions in other regions are minor and mostly limited to the expansion of existing refineries. New crude distillation capacity requirements at 19.2 mb/d through 2045 In the long-term (2023–2045), global refining capacity additions are set at 19.2 mb/d (including capacity creep). Similar to oil demand growth, additions are front-loaded, with a slowdown in the rate towards 2045. Around 85% of long-term additions are expected in the Asia-Pacific, Middle East and Africa. This continued trend of refining capacity migration from developed to developing countries mirrors the shifts in regional demand. World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 9 EXECUTIVE SUMMARY Crude distillation capacity additions, 2023–2045 mb/d 8 2040–2045 7 2035–2040 2025–2030 2030–2035 2023–2025 6 5 4 3 2 1 0 US & Canada Latin America Africa Europe Russia & Caspian China Middle East Other Asia-Pacific Source: OPEC. Long-term crude and condensate trade flows rise to above 45 mb/d by 2045 Driven by strong demand growth, global interregional crude and condensate trade is expected to reach levels above 39.3 mb/d in 2025, up by more than 3 mb/d relative to 2022 levels. After 2025, total crude and condensate flows are set to increase gradually to 45.3 mb/d by 2045, driven by rising oil demand and declining supply in importing regions. Major contributors to the export growth are the Middle East, Latin America and the US & Canada. Global crude and condensate exports by origin*, 2022–2045 mb/d 50 Asia-Pacific Middle East Russia & Caspian Europe Africa Latin America US & Canada 40 30 20 10 0 2022 2025 2030 2035 2040 2045 * Only trade between major regions is considered, intratrade is excluded. Source: OPEC. Asia-Pacific remains by far the largest destination for crude exports The Asia-Pacific remains by far the main destination for global crude and condensate exports. Total imports increase gradually from 23 mb/d in 2022 to 32.6 mb/d in 2045. This translates into its share of the global interregional trade rising from around 64% in 2022 to almost 72% in 2045. 10 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries EXECUTIVE SUMMARY Crude and condensate imports to the Asia-Pacific by origin, 2022–2045 mb/d 35 Middle East Russia & Caspian Europe Africa Latin America US & Canada 30 25 ES 20 15 10 5 0 2022 2025 2030 2035 2040 2045 Source: OPEC. The Outlook considers two alternative scenarios relative to the Reference Case An ‘Advanced Technology’ Scenario illustrates a technology-driven means of limiting the global temperature increase to well below 2°C. This includes a much greater diffusion of carbon capture utilization & storage (CCUS), carbon capture and storage (CCS) and direct air capture (DAC) technologies in industrial sectors, stronger investment in hydrogen supply networks, and the increasing adoption of a circular carbon economy (CCE) framework across the global economy. Primary energy demand in this scenario will be almost 55 mboe/d lower by 2045 compared to the Reference Case. Oil demand, after stabilizing at over 100 mb/d until around 2035, will then drop slightly towards 98 mb/d by 2045, which is 18 mb/d lower than in the Reference Case. The ‘Laissez-Faire’ Scenario, which is a more optimistic and more equitable outlook for developing economies, assumes a faster return to higher economic growth during the medium-term and maintains this stronger growth in the long-term, especially for developing countries. Policies will tighten in the future, contributing to improved efficiencies and supporting the further expansion of renewables; however, in an isolated manner given the absence of a coordinated move to reduce future emissions. Moreover, protectionism and unilateralism will play a more important role in prioritizing local development needs over global issues. In this scenario, both primary energy demand and oil demand will be consistently higher than the Reference Case. Oil demand surpasses 113 mb/d by 2030 and continues growing to 122 mb/d in 2045. Compared to the Reference Case, this represents a difference of more than 1 mb/d by 2030, which then expands to 6.3 mb/d in 2045. World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 11 INTRODUCTION Introduction 12 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries INTRODUCTION The global energy landscape has undergone significant changes during 2022 and 2023. The start of the conflict in Eastern Europe in early 2022 led to an energy crisis that redirected energy flows and exacerbated record-high energy prices. This was especially the case for spot natural gas and coal prices, as well as electricity prices in many major consuming regions. Moreover, the period has also seen a broad realization across many societies on the need for energy security to go hand-in-hand with economic development and reducing emissions, with many policymakers re-evaluating their approach to energy transition pathways. This is true of many of the early adopters of net zero targets in the Global North. It is also true that countries in the Global South have now made it clear what energy transitions mean for them. This renewed focus on energy security and energy affordability has led to a variety of developments. Many developed countries have turned to fossil fuels, including coal, to meet short-term energy needs, while also enhancing targets related to low-carbon energy and energy efficiency improvements, which are also in line with climate change policies. Increasing the deployment of renewable energy and/or nuclear energy is seen by these countries as a means to address the dual challenge of energy security and sustainability. However, these ambitious targets increasingly stand at odds with realities on the ground. The required investments are significantly lagging, as policymakers in many countries re-direct expenditures to more pressing issues such as the cost-of-living crisis, inflation and recession worries and welfare spending. There is also a rising chorus of voices questioning the viability and actual benefits of these policies and targets, and asking whether there are other options to help reduce emissions while ensuring energy security and economic development. At the same time, many developing countries, in their quest to raise the level of energy security, have increasingly turned to domestic energy supplies, predominantly coal. Moreover, there has also been a refocus on the critical need to continue to utilize fossil fuels going forward, while at the same time reducing emissions. Increasingly, calls for more equitable growth come from developing nations where people need more energy and where countries need to be able to utilize their resources to the fullest, while not undermining the UN’s goal to ensure affordable, reliable and modern energy services for all by 2030. As a result, the focus of policymakers is turning to improved energy access and energy poverty eradication, while utilizing all energy sources. This clearly depicts a major difference between developed and developing countries. In the former, energy demand has been increasing only marginally, or even declining in recent years. This allows for a faster penetration of low-carbon energy sources in the energy mix, albeit not at levels to meet many of the targets set. At the same time, developing countries, with rapidly growing populations and economies are likely to see a strong increase in total energy demand, which cannot be met by renewables alone. The deployment of renewables is capital intensive, and most developing countries do not have sufficient access to financing. This is why the increase of low carbon energy sources in the mix is considerably slower, when compared to developed countries. Alongside a recovery from the pandemic, these developments have also helped to support oil demand growth in recent years. Following the turbulent years of 2020 and 2021, global oil demand continued growing in 2022, despite the fact that the last quarter of 2022 and the beginning of 2023 were marked by high inflation and continued geopolitical tensions. World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 13 INT INT INTRODUCTION High energy prices that prevailed during most of 2022 started declining towards the end of the year as it became clearer that the energy supply crisis in Europe was easing, supported by a relatively mild winter. Adding to this was Russia’s ability to redirect its oil exports, mainly to Asia, after the new set of EU sanctions came into force, which, with a few minor exemptions, banned Russian oil imports to the EU. Major central banks have increased key interest rates in an effort to tame inflation. This, combined with high debt levels in several regions, lowered the prospects for economic growth during 2023. Despite this outlook, oil demand proved to be relatively resilient to downward revisions during 2023. It remains to be seen, however, how the link between oil demand and the level of economic activity will develop in the years to come as mixed signals are emerging on factors that have the potential to steer this relationship in the future. On the one hand, energy security is still on the top of agenda for policymakers as many of them have learned lessons from recent developments. Moreover, several major energy companies have signalled a shift in their investment strategy towards more investments in oil and gas projects, acknowledging a more balanced all energies approach to the energy transitions. On the other, there are new policy initiatives aiming at emission reductions, such as the adoption of the ‘Fit for 55’ package by the European Parliament in April 2023 and the Inflation Reduction Act in the US adopted in August 2022. Additionally, there is the LongTerm Aspirational Goal (LTAG) for international aviation to achieve net-zero CO2 emissions by 2050 adopted by the International Civil Aviation Organization (ICAO) and the International Air Transport Association (IATA) in October 2022. Additionally, recent investments by car manufacturers to shift production lines towards electric mobility, especially in China and Europe, is another area to be closely monitored as the evolving composition of the car fleet could have a significant impact on future oil demand. On the supply side, a considerable degree of uncertainty regarding the medium- and longterm outlook for non-OPEC liquids persists too. Against the backdrop of transitioning towards a lower-emissions future, persistent long-term concerns remain around investment in the oil and gas sector, especially given concerns related to financing, shareholder pressure, and environmental, social and governance (ESG) interests. However, recent liquids production has remained robust, with non-OPEC supply healthy and OPEC+ continuing to act proactively, continuously and pre-emptively, ensuring global oil market stability. The outlook for non-OPEC liquids supply retains the pattern described in recent Outlooks – healthy medium-term growth, followed by a peak in the early 2030s, after which output gradually declines again. Combined with oil demand growing in the long-term, albeit at a slower pace, this implies a rising requirement for OPEC liquids, and hence an increasing market share for OPEC producers. Cognizant of all the uncertainties, this year’s World Oil Outlook again sketches alternative energy trajectories. An ‘Advanced Technology’ Scenario illustrates a technology-driven means of limiting the global temperature increase to well below 2°C, with a much greater diffusion of CCUS, CCS and DAC technologies in industrial sectors, stronger investment in hydrogen supply networks, and the increasing adoption of a CCE framework across the global economy. The ‘Laissez-Faire’ scenario assumes a faster return to higher economic growth during the medium-term and maintains this stronger growth in the long-term, especially for 14 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries INTRODUCTION developing countries. Policies will tighten in the future, contributing to improved efficiencies and supporting the further expansion of renewables; however, in an isolated manner given the absence of a coordinated move to reduce emissions. Moreover, protectionism and unilateralism will play a more important role in prioritizing local development needs over global issues. This Outlook once again underscores the major questions and challenges the world faces when imagining a common energy future. In this regard, OPEC continues to strive for a transparent, open-minded and facts-based dialogue to help enable a sustainable energy and economic future for all. This should focus on all energy sources, all relevant technologies, and the views of all stakeholders, and it is hoped this publication contributes to that end. World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 15 INT CHAPTER ONE Key assumptions 16 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries KEY ASSUMPTIONS Key takeaways Sustainable energy and economic prosperity for all requires the use of all sources of energy and the deployment of all relevant technologies with unprecedented levels of investment and collaboration, and with energy security, economic development and reducing emissions going hand-in-hand. This outlook takes all this on board, including recent shifts and the re-consideration of policies and targets related to energy transitions by governments across the world, to provide a forward thinking and realistic outlook that is based on a scientific approach and hard data. This outlook takes a relatively conservative approach as it assumes that alreadyenacted, let alone announced energy policies will be fully or comprehensively implemented. The global population is estimated to expand by around 1.5 billion from its present level of almost eight billion in 2022 to around 9.5 billion by 2045. Driven by the Middle East & Africa and other Asia, non-OECD population growth is projected to be much higher than the Organisation for Economic Co-operation and Development (OECD). The relative share of the global working-age population is expected to decline from 65% in 2022 to 63% in 2045, despite increasing by 826 million over the outlook period. The global urbanized population is projected to grow by 1.7 billion, increasing from 57% in 2022 to 66% by 2045. Global GDP growth between 2022 and 2045 is expected to remain robust and increase at an average rate of 3% p.a. With an average GDP growth of 6.1% p.a. over the projection period, India is set to remain the fastest-growing major developing country. Global GDP is projected to almost double, from around $138 trillion in 2022 to $270 trillion in 2045, all in 2017 purchasing power parity (PPP) terms. China and India alone are set to account for more than a third of the global economy in 2045. The OECD region’s share of the global economy is expected to drop from 46% in 2022 to 34% in 2045. Existing and future technologies will significantly contribute to shaping the future energy landscape. The development and deployment of various technologies also helps to set the scene for the Reference Case. Hydrogen is perceived in the context of energy transitions as a possible solution to some climate challenges, playing the role of an energy carrier. World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 1 17 CHAPTER ONE Multiple key assumptions are made to establish this year’s WOO. These include demographic projections and trends, possible economic growth in the midst of the current expedited monetary tightening, and the expected influence of technology advancements on the energy sector. With regard to energy policies, the Outlook incorporates recent shifts in thinking and targets related to energy transitions by governments across the world. Compared to previous WOOs, it takes a more conservative approach towards assuming that already-enacted, let alone announced energy policies, will be fully implemented, thus providing a forward thinking and realistic outlook. What is clear is that a sustainable energy and economic future for all requires all energy sources, all relevant technologies, unprecedented investment and collaboration, and with energy security, economic development and reducing emissions going hand-in-hand. 1.1 Population and demographics With advancements in healthcare, nutrition, sanitation, among other factors to improve quality of life, the average age of the global population has risen considerably in recent decades. Today, the world’s population continues to grow although the general development is a slowing trend. Looking ahead some developing countries may also see a similar transitions pathway as the OECD, but many others will defy this trend. In this chapter, various demographic fundamentals are considered and thoroughly evaluated as a means to help evolve the WOO’s Reference Case projections. Last year, the United Nations Department of Economic and Social Affairs published their 2022 Revision of World Population Prospects (UNDESA, 2022). The 27th edition of the UN’s official population estimates and projections reflect many key demographic indicators addressed in this section. A key element highlighted is the sustained momentum of a decline in fertility rates. Regarding the projection for this year’s Outlook, total global population is estimated to expand by around 1.5 billion close to eight billion in 2022 to around 9.5 billion by 2045 (Table 1.1). Regionally, the Middle East & Africa (excluding OPEC countries), as per the WOO’s regional groupings (see Annex B), is expected to drive 48% of the population growth. Other Asia, India and OPEC each contribute between 15% and 19%. In the OECD, population growth for 20222045 is also estimated to be considerably less than the 184 million expansion in its population over the 1998–2022 period. Growth in OECD Americas will more than offset a 12 million decline in OECD Asia-Pacific. Overall, the non-OECD dominates the projections, accounting for more than 97% of the population growth compared to marginally less than 3% in the OECD. The main anomaly for the non-OECD is the expectation that China’s population drops by almost 76 million over the outlook period. This also reflects by far the largest decline of the major economies. This compares to population growth of 192 million in the previous 24 years (1998–2022), as seen in Figure 1.1. Furthermore, 2023 marked the year that China’s population was overtaken by that of India (Figure 1.2). Going forward, India’s population is set to continue expanding, with an estimated increase of 229 million over the period 2022–2045, albeit less than the 396 million added to its’ population in the previous 24 years. The Middle East & Africa region and OPEC are currently undergoing rapid population growth. This trend is projected to maintain its momentum through to 2045. In fact, the region is set to have the largest overall population by the end of the forecast period, a level it achieves around 2035. The Middle East & Africa and OPEC are the only regions expected 18 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries KEY ASSUMPTIONS Table 1.1 Population by region millions Levels Growth 2022 2025 2030 2035 2040 2045 2022–2045 OECD Americas 527 537 551 564 575 583 56 OECD Europe 583 585 587 587 587 584 1 OECD Asia–Pacific 216 215 214 211 208 205 –12 1,327 1,337 1,351 1,363 1,370 1,372 46 482 492 508 522 533 541 59 Middle East & Africa 1,197 1,284 1,436 1,594 1,756 1,920 India 1,417 1,455 1,515 1,568 1,612 China 1,426 1,424 1,416 1,400 1,378 1,350 –76 Other Asia 1,258 1,300 1,368 1,430 1,486 1,535 277 OPEC 527 558 609 660 712 762 234 Russia 145 143 141 139 137 135 –10 Other Eurasia 196 198 201 203 205 207 11 Non–OECD 6,649 6,855 7,195 7,516 7,818 8,095 1,447 World 7,975 8,192 8,546 8,879 9,188 9,468 1,492 OECD Latin America 723 Width: 135.6 mm 1,646 229mm Height: 65 Source: United Nations (UN). Figure 1.1 Figure 1.1 mboe/d World population growth, 1998–2022 versus 2022–2045 millions 2,400 1,900 Rest of the World Latin America 1,400 OECD China OPEC 900 Other Asia India Middle East & Africa 400 –100 1998–2022 2022–2045 Source: UN. to see a significant rise in their growth rate, adding 723 million and 234 million people between 2022 and 2045, respectively. This compares to 541 million and 220 million added from 1998–2022. World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 19 1 CHAPTER ONE Figure 1.2 mboe/d Figure 1.2 World population trends, 1990–2045 millions 2,500 OPEC Latin America Rest of the World 2,000 Middle East & Africa Other Asia India OECD China 1,500 1,000 500 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 Source: UN. 1.1.1 Working-age population The global working-age population (aged between 15 and 64) is projected to grow by 826 million to reach six billion by 2045 (Table 1.2). Despite this large growth, and mainly due to the general ageing of the population, the share of the working age population is set to fall from 65% in 2022 to 63% in 2045. From a regional perspective, the share of the working-age population in non-OECD countries is forecast to drop only slightly, from 65% in 2022 to 64% in 2045, while the change in OECD countries is more pronounced, falling from 64.6% in 2022 to 59.6% in 2045. Table 1.2 Working population (age 15–64) by region millions 2035 2040 2045 Growth 2022–2045 2022 2025 2030 OECD Americas 346 350 355 359 361 363 17 OECD Europe 376 374 367 360 351 342 –34 OECD Asia–Pacific 135 133 130 125 118 113 –22 OECD 857 857 852 843 830 818 –39 Latin America 327 334 344 351 354 354 28 Middle East & Africa 683 743 850 961 1,076 1,194 511 India 961 995 1,043 1,079 1,102 1,117 156 China 984 987 972 931 867 822 –162 Other Asia 825 855 901 942 976 1,005 180 OPEC 317 339 377 413 447 478 160 Russia 96 94 93 92 89 85 –11 127 128 130 132 132 131 4 Other Eurasia Non–OECD 4,321 4,475 4,710 4,900 5,044 5,187 866 World 5,178 5,332 5,562 5,744 5,874 6,005 826 Source: UN. 20 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries KEY ASSUMPTIONS In the OECD, only OECD Americas is set to see a slight increase in the working-age population, mainly due to immigration. A 16% decline in the working- age population is forecast for OECD Asia-Pacific over the forecast period. The decline for OECD Europe is set to be smaller, at 9%, but this is evidently still significant. China’s working age population is projected to decline by 162 million between 2022 and 2045, while India’s working-age population is projected to increase by 156 million. The Width: highest absolute growth is forecast for the Middle East & Africa, with an increase135.6 of 511mm mm million in the working-age population. Other Asia and OPEC are alsoHeight: expected 65 to see significant growth. 1 1.1.2 Urbanization Urbanization is closely linked to improved energy access and a key factor in helping alleviate energy poverty as both economic development and energy consumption tend to increase. The urbanization rate measures the percentage of the total population living in urban areas. In 2022, about 4.5 billion people, which is almost 57% of the world’s population, lived in urban areas (Figure 1.3). This is a sharp increase from 44% only three decades ago. Urbanization is projected to grow in the coming decades, with 66% of the global population, equivalent to over 6.2 billion people, living in urban areas by the end of the forecast period. Figure 1.3 mboe/d Figure 1.3 Urbanization rate for selected regions, 2000–2045 % 95 India Middle East & Africa Other Asia 85 China Non-OECD World OPEC Latin America OECD 75 65 55 45 35 25 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 Source: UN. OECD and Latin America are the most urbanized regions, with more than 80% of the population living in urban areas. OECD Asia-Pacific has the highest urbanization rate at 89%, followed by OECD Americas at 83%. This trend is set to continue, despite already high rates of urbanization. OECD and Latin America are projected to have urbanization rates of 87% and 86%, respectively, by 2045, with OECD Asia-Pacific at over 90%. World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 21 CHAPTER ONE China’s urbanization has changed dramatically over the past three decades, driven by rapid economic development. While the country’s urbanization rate was 28.2% in 1992, it increased significantly to 64% in 2022. Due to a mature domestic economy, urbanization is expected to continue at a slower pace, resulting in an urbanization rate of 78.3% by 2045. India had an urbanization rate similar to that of China in 1992. However, in contrast to China’s rapid urbanization, India’s rate has only increased to 36% in 2022. India has been the region with the lowest urbanization rate since 1989, when it was overtaken by China. This is expected to continue until the end of the forecast period, when its rate is expected to be 50%. Urbanization in Other Asia follows India’s trend throughout the projection period, albeit from a higher level. OPEC Member Countries currently have an urbanization level of 68%, and this is expected to reach 76% by 2045. The Middle East & Africa region is anticipated to experience significant increased urbanization in the coming decades. However, the majority of Africa’s population is set to remain rural, with 43% of the population expected to live in urban areas by 2045. 1.1.3 Migration Migration is another dynamic element in the demographic disparities that exist at the regional level. Net migration, as shown in Table 1.3, measures the change in population between the UN’s medium variant case and the zero migration variant case. The COVID-19 pandemic had a significant impact on both mobility and international travel, severely affecting migration across regions and countries. The impact of COVID-19 on migration, however, has diminished as travel restrictions have eased. In the short-term, net migration figures are strongly influenced by geopolitical instability, leading to a large outflow of people from one region to another. Table 1.3 Net migration by region millions 2020–2025 2025–2030 2030–2035 2035–2040 2040–2045 OECD Americas 5.2 5.9 6.3 6.3 6.2 OECD Europe 5.8 1.7 3.3 3.4 3.5 OECD Asia-Pacific 1.4 1.5 1.5 1.5 1.5 OECD 12.5 9.1 11.1 11.2 11.1 Latin America –0.6 –1.1 –0.8 –0.8 –0.7 Middle East & Africa –1.3 –1.1 –1.9 –1.8 –1.8 India –1.8 –2.4 –2.4 –2.5 –2.5 China –1.2 –1.6 –1.5 –1.6 –1.5 Other Asia –3.5 –4.2 –4.1 –4.1 –4.1 OPEC –2.0 0.5 –0.3 –0.4 –0.4 Russia 1.4 0.3 0.5 0.5 0.5 –3.4 0.6 –0.5 –0.5 –0.5 –12.4 –9.1 –11.1 –11.2 –11.1 Other Eurasia Non–OECD Source: UN. 22 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries KEY ASSUMPTIONS In the medium- and long-term, net migration is anticipated to return to historical patterns, with a steady flow of people from non-OECD regions moving to OECD countries. However, evolving geopolitics may have a significant impact on future migration patterns. 1.2 Economic growth The key economic developments as summarized and described in last year’s WOO have broadly continued. The issues include deglobalization, rising debt levels, skilled labour shortages, the consequences of the conflict in Eastern Europe, with a variety of spillover effects, and the accelerated financial tightening across the world, triggered by strong rises in inflation. Of these issues, notably the effects of monetary tightening and deglobalization have accelerated, while the other issues remain, but have not necessarily progressed in terms of their overall economic impact. 1.2.1 Current situation and short-term growth While the COVID-19 pandemic is now generally considered to be in the rear view mirror, it has had major economic effects. The strict lockdown measures in 2020–2021 were particularly impactful, but the reopening of economies has helped to support economic growth. Throughout 2022, global supply chain issues prevailed, both on account of geopolitical developments in Eastern Europe and the China’s zero-COVID policy. Positively, the situation improved towards the end of 2022, and the majority of these supply issues now appear to have been overcome. While inflation has remained notably low in China, it has been a central challenge for most economies in 2022 and 2023. General inflation levels rose considerably in 2022, but it is now core-inflation that is persistently high. Expectations for ongoing firm inflation, at least in the medium-term, means that interest rates will likely remain above pre-pandemic and pandemic levels in many key economies, importantly in the United States (US), the Euro-zone and the United Kingdom (UK). India and Brazil have more room to manoeuvre and, in China, a more accommodative monetary policy is possible and likely at least in the medium-term. In 2023, global economic growth has remained uneven among regions. However, upside potential in the short-term may come from less accentuated inflation, which would provide central banks with room for relatively more accommodative monetary policies. Emerging Asia, particularly India, but also Brazil and Russia could surprise further to the upside, with domestic demand and external trade accelerating. An even stronger-thananticipated rebound in China after the reopening of its economy may provide further support to the global economy. Moreover, the US may keep its momentum and potentially could see growth turning out higher-than expected. 1.2.2 Medium-term economic growth The carry-over effects of the main short-term issues will also likely provide influential forces for the medium-term economic growth dynamic. The following major assumptions and dynamics are made for the Reference Case. World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 23 1 CHAPTER ONE Inflation is expected to gradually slow in the medium-term. After global inflation reached more than 8% in 2022, the consumer price index is forecast to slow to around 6% in 2023. From 2023 onwards, the medium-term inflation path sees a gradual slowdown, reaching around 2.5% by 2028. The medium-term global inflation average is forecast at 3.2%. While inflation is forecast to be relatively contained in the medium-term, monetary tightening is expected to continue into 2024 and beyond. However, it is forecast that the pace of interest rate hikes in 2022 and 2023, particularly in the US, will not be repeated and that interest rates in the US, the Euro-zone and the UK will peak by the end of 2023. From 2024 onwards, the monetary policy focus will be on a reduction of balance sheets. Global liquidity will, therefore, be reduced, but only gradually. In the OECD, interest rates are expected to be lowered from 2024 onwards. Japan is forecast to continue a more accommodative monetary policy and is anticipated to keep its key policy rates around 0% up to the end of the medium-term period. Interest rates in the major emerging markets are expected stay at relatively higher levels throughout the period. Assumptions about the conflict in Eastern Europe are challenging. It is assumed that there is no escalation of the conflict, nor any spill over into other arenas, especially neighbouring economies. In connection with inflation and interest rate trends, the debt related challenges in various economies need to be closely watched. Escalating debt levels have become an increasing concern, particularly given the rapid rise in key policy rates across the world in response to rising inflation. Global debt rose to $305 trillion in 1Q23, which is $45 trillion above pre-pandemic levels and it is expected to rise further, according to the Institute of International Finance (IIF). No major dislocation from this situation is assumed in the forecast, but it is clear that some highly indebted economies may face potentially mounting issues, of which fiscal constraint would be only a minor one. Moreover, some countries may potentially face default in the medium-term. In periods of elevated debt, various types of taxes such as those on assets, capital gains, property, inheritance, top-tier incomes, and corporate earnings are often raised to pay for rising debt services and/or to mitigate debt levels. It is also expected that more environmental taxes may be introduced in the coming years, particularly in developed economies. In the medium-term outlook, it is presumed that potential tax hikes do not hinder the global economic rebound. It is assumed that these will mainly be sourced from well-off and secure entities with the tax collection well-directed. However, the introduction of further taxes has the potential to slightly suppress certain growth aspects, but this is expected to be on a minor scale. If consumer taxes increase, or those impacting the middle and lower income groups escalate, a more substantial inhibiting effect on GDP growth may become evident. For the medium-term forecast, it is also assumed that there will be no further escalation in conflicts that may dampen the global economic recovery going forward. Generally, domestic inequalities within economies will be successfully managed via multilateral cooperation, redistribution effects or other policy measures. In addition, it is forecast that the trend of global fragmentation continues, which provides some dampening effect, albeit gradually. It is also assumed that global trade becomes more regionally dominated, with a steady increase in the interactions between the three main trading hubs that have been established in recent decades. One is the US-centred trade region of the Americas, dominated by North America. Another is the European region, with its dominant 24 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries KEY ASSUMPTIONS forces of Germany, France and the UK, while the third is the Asian region, centred on China, India and the Middle East. Trading within Latin America is likely to increase over the mediumterm, again with rising regional engagements led by Brazil. A potential consequence of less globalized trading could be further regional inequalities, as wealth transfers via exports shift towards wealthier economies. These changes, however, will take time to evolve and may only become visible slowly over the medium-term. It is important to note that emerging and developing economies are forecast to outgrow advanced economies in the medium-term, but they will also likely face decelerating growth momentum amid maturing domestic economies. In addition, a potentially lessening global trade dynamic may support this trend. Similarly, to previous WOOs, China and India, constituting the two largest emerging economies, are expected to follow this pattern. This is reflected in both medium- and long-term forecasts. Another important element in connection to economic growth is productivity. In advanced economies, in particular, productivity was already in decline in the pre-pandemic years. While current forecasts anticipate productivity gains to remain low, the current severe staff shortages in combination with the drive towards digitalization may lead to a pick-up in productivity. This would come via the effective utilization of new technologies and robotics, including utilizing artificial intelligence (AI). Productivity growth would not only be in the process of industrial production, but the services sector too. This has the potential to lift global economic growth significantly. The challenge associated with such potentially significant productivity improvements, however, is how best to utilize human resources that could be idled and how best to avoid social conflict. Table 1.4 Medium–term annual real GDP growth rate 2022 2023 2024 % p.a. 2025 2026 2027 2028 Average 2022–2028 OECD Americas 2.3 1.8 0.7 1.5 1.8 1.9 2.0 1.5 OECD Europe 3.8 0.6 1.0 1.4 1.7 1.8 1.8 1.4 OECD Asia-Pacific 2.0 1.2 1.2 1.3 1.4 1.4 1.4 1.3 OECD 2.9 1.2 0.9 1.4 1.7 1.8 1.8 1.5 Latin America 4.0 1.7 1.6 2.0 2.1 2.2 2.3 1.9 Middle East & Africa 3.4 2.6 2.9 3.2 3.3 3.4 3.4 3.1 India 6.7 5.6 5.9 6.2 6.3 6.3 6.4 6.1 China 3.0 5.2 4.8 4.8 5.0 4.9 4.8 4.9 Other Asia 4.6 3.6 3.8 4.5 4.5 4.6 4.6 4.3 OPEC 5.6 3.3 2.9 2.8 2.9 3.0 3.0 3.0 Russia –2.1 0.6 1.0 1.0 1.2 1.3 1.4 1.0 Other Eurasia –3.0 2.5 2.8 2.5 2.5 2.4 2.4 2.5 Non-OECD 3.6 3.9 3.9 4.1 4.3 4.3 4.3 4.1 World 3.2 2.7 2.6 2.9 3.1 3.2 3.3 3.0 Source: OPEC. World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 25 1 CHAPTER ONE After the 2023 GDP growth forecast of 2.7%, it is expected that growth slows to around 2.6% in 2024. Thereafter, growth is anticipated to mean revert towards the medium-term growth potential of around 3.2%. At the end of the medium-term period in 2028, growth is forecast at 3.3%, supported by a gradual recovery in both the OECD and non-OECD. However, emerging economies will likely experience a maturing growth dynamic, relative to advanced economies, a trend that is expected to continue in the long-term too. Growth by region In OECD economies, the rapidly rising interest rate environment of 2022 and 2023 will dampen economic growth. While 2023 GDP growth is forecast to be materially supported by the services sector, it will be the industrial side of OECD economies that dampens growth significantly. Over the course of the medium-term period, however, the growth pattern is set to normalize again. The OECD is expected to see growth of 0.9% in 2024 and then rise to 1.8% at the end of the medium-term period in 2028. This compares to an OECD pre-pandemic average growth level (2010–2019) of 2.1%. OECD Americas will be particularly impacted by the interest rate regimes of the US Fed and the central bank of Canada. High interest rates will lead to growth of only 0.7% in 2024, compared to a pre-pandemic average (2010–2019) of 2.3%. By 2025, however, GDP growth in OECD Americas is forecast to rebound to a level of 1.5% and then continue rising to 2% in 2028. A major positive effect from 2024 onwards is set to come from monetary easing as inflation is expected to retract materially over the medium-term. On the flip side, very high US debt levels, in combination with any sustained relatively high interest rate regime, could challenge the growth momentum. OECD Europe’s growth is forecast to be significantly challenged by ongoing high interest rates, amid high inflation, a situation that is likely to impact GDP growth in the region in 2024 and beyond. In addition, the conflict in Eastern Europe and its political outcome, as well as its ripple effect on both Europe’s energy supplies and energy prices, will also continue to impair economic development, at least at the beginning of the medium-term. Moreover, debt-related issues in some EU economies, particularly Italy, and potentially Greece, may re-emerge, at a time of rising interest rates and slowing GDP growth. Positively, however, interest rates are forecast to be lowered by the ECB over the medium-term, given that inflation is forecast to recede from 2023 onwards. This dynamic will lead growth higher to stand at 1.8% in 2028. This compares to a pre-pandemic average growth level (2010–2019) of 2% and 1% in 2024. In OECD Asia-Pacific, Japan is forecast to witness a relatively stable medium-term growth dynamic. The region’s major trading partner, China, also provides helpful guidance for future growth, given its importance as a customer for input goods from OECD Asian economies. While China is forecast to see less dynamic growth, the other important group of trading partners, the G7 economies, are forecast to accelerate. Monetary stimulus is forecast to taper off in most OECD Asia-Pacific economies, but the Bank of Japan’s (BoJ) monetary policy is expected to be more accommodative, compared to its G4 central bank peers. For OECD AsiaPacific, growth is set to stand at 1.2% in 2024 and reach 1.4% in 2028. This compares to an OECD Asia-Pacific pre-pandemic average growth level (2010–2019) of 2%. The medium-term growth outlook in non-OECD countries remains relatively diverse. While China is forecast to see a less dynamic growth pattern, India is anticipated to see growth gradually expand. Moreover, the other Asian regions, as well as Latin America and the Middle 26 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries KEY ASSUMPTIONS East & Africa, are forecast to see GDP levels expand over the medium-term. This is driven more by the anticipation of improving domestic activity in these economies than external factors. In this respect, high population growth will play a pivotal role, an aspect that will be especially relevant in the longer-term. In Latin America, the two major economies, Brazil and Argentina, will likely shape growth patterns. Brazil is expected to benefit from fiscal reform and selective governmental support measures. The ongoing deceleration of inflation and the expectation of a consequent accommodative monetary policy adds further support to medium-term growth. Argentina still has to deal with a number fiscal challenges, at least at the beginning of the medium-term period. Considering the high debt levels, Argentina has limited fiscal space for manoeuvre and the medium-term growth momentum is set to be low. Growth in Latin America is forecast at 1.6% in 2024 and reaches 2.3% in 2028. This compares to a pre-pandemic average growth level (2010–2019) of 2.2%. In the Middle East & Africa, medium-term growth is expected to rise from 2023 levels. This is supported by the anticipation of steady commodity demand, growing regional domestic demand and supported by an expansion of the middle class. Additionally, a continued expansion in the global growth dynamic is forecast to lift foreign investment into the region. Growth in the Middle East & Africa is expected at 2.9% in 2024 and reaches 3.4% in 2028. This compares to a pre-pandemic average growth level (2010–2019) of 3.3%. China is forecast to witness growth of 4.8% in 2024. The economy’s growth is forecast to remain relatively stable over the course of the medium-term period. While challenges in external trade are expected to remain, domestic demand is set to only gradually pick-up. Furthermore, it is anticipated that the central government will counterbalance any material deviation from the government’s growth target. Growth of 4.8% in 2024 is the same level expected at the end of medium-term in 2028. This compares to a pre-pandemic average growth level (2010–2019) of 7.7%. India’s growth is forecast to see some acceleration from 2024 onwards. The economy is set to benefit from the country’s population growth, a rising middle-class and major infrastructure projects over the medium-term. An ongoing deceleration of inflation and the expectation of a consequent accommodative monetary policy is set to add further support to medium-term growth. India’s growth is forecast to stand at 5.9% in 2024 and reaches 6.4% in 2028. This compares to a pre-pandemic average growth level (2010–2019) of 7.1%. Other Asia is forecast to see sound medium-term growth. In 2024, growth is forecast at 3.8% and this rises to 4.6% by 2028. This compares to a pre-pandemic average growth level (2010– 2019) of 5%. The OPEC region is supported by continued diversification efforts, an expanding and relatively young population, rising domestic economic activity and steady growth momentum in commodity markets. Growth is forecast to stand at 2.9% in 2024 and reaches 3% in 2028. This compares to a pre-pandemic average growth level (2010–2019) of 2.2%. In Eurasia, Russia constitutes the most important economy. It is evident that growth has been, and will be, impacted by geopolitical issues including the associated effects of sanctions. It is expected, however, that Russia will continue to witness a rebound in its growth to 1% in 2024, following 0.6% in 2023. This growth level is then anticipated to lift further World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 27 1 CHAPTER ONE and is seen at 1.4% in 2028. This compares to a pre-pandemic average growth level (2010– 2019) of 2.1%. Other Eurasia is forecast to see a deceleration in its medium-term growth rate. Growth is set to stand at 2.8% in 2024 and reaches 2.4% in 2028. This compares to a pre-pandemic average growth level (2010–2019) of 2.7%. 1.2.3 Long-term economic growth Forecasting long-term economic growth is inherently challenging, especially in the aftermath of the COVID-19 pandemic that has introduced a multitude of uncertainties and variations in regards to its impacts at the macro level. The complexity of this task has been heightened even further this year due to the entwined nature of the substantial global economic uncertainties discussed in both the short- and medium-term outlooks. Making assumptions about the conflict in Eastern Europe is an exceedingly difficult task. While some degree of global re-balancing has been witnessed thus far, the current outlook remains unclear with many uncertainties regarding the conflict’s status and the potential ramifications for the global status quo. Additionally, further geopolitical tensions add another layer of complexity to the potential consequences for the global economic growth trajectory. In addition to the COVID-19 legacy and geopolitical tensions, several other systemic issues necessitate continuous monitoring, such as the ongoing global economic fragmentation that entails evolving shifts in trade, investment, skills, knowledge, and scientific transfers. Furthermore, the complexities arising from the further increase in public debts across economies and the advent of higher inflation and interest rates, add further challenges to the current landscape for economists, and for policymakers, who must navigate these multifaceted issues and formulate effective strategies accordingly. Likewise, the potential energy sector transformations may have a substantial impact on economies. While transitions towards alternative energy sources, particularly renewables, have accelerated in recent years, there is a growing discussion about the benefits and competitiveness of fossil fuels within a sustainable energy mix, particularly due to an increased focus on energy security. This emerging narrative recognizes the need to balance environmental concerns with the economic considerations associated with energy security, highlighting the importance of finding sustainable solutions for all. The ongoing energy transitions and the associated rise in energy prices has the potential to affect the long-term structure of the global economy and support prolonged levels of high inflation. The shift towards more expensive renewable energy systems may result in higher prices, potentially constraining consumer demand and business investments. Other sources of elevated inflation in the long-term include demographics changes, such as population ageing and labour market shortages, particularly in advanced economies, unsustainable levels of public debt, and potential tax increases. Another significant driver of the elevated inflation regime is the trend toward global economic fragmentation. As countries re-evaluate their global dependencies, it is evident that many may prioritize domestic production and selfsufficiency as regionalization becomes more noticeable. In summary, the current developments unfolding around the world are marked by their complexity and systemic nature, posing substantial challenges for forecasting. Over the last 28 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries KEY ASSUMPTIONS two years, it could be said that the world has witnessed an unprecedented transition phase driven by geopolitical dynamics and a shift towards a multipolar world with diverse value systems. Nevertheless, the outcome, and full implications of this transition, remains uncertain. For example, since 2022, the group of countries known as BRICS (Brazil, Russia, India, China and South Africa) have witnessed a notable rise in prominence, drawing interest from more than 30 countries that have expressed an interested in joining the group and it’s New Development Bank. Saudi Arabia, the United Arab Emirates, IR Iran, Egypt, Ethiopia and 135.6 mm Argentina will join the BRICS group as early as 2024. These developmentsWidth: signify the evolvHeight: 65 mm ing nature of the BRICS platform in facilitating the establishment of new development, investment and trade institutions within the bloc. Based on the aforementioned, and taking into account current developments, the assumptions underlying long-term economic growth developments continue to revolve around productivity growth, demographic trends, and labour market dynamics. These are the key longterm growth trend factors shaping the trajectory of economies. These factors are relatively well understood and continue to play a major role in driving longterm economic growth. In that context, labour productivity has been the largest contributor, both regionally and globally (Figure 1.4). Additional productivity growth could come from the pandemic-driven trend towards digitalization, robotics and AI, and the more effective use of these evolving technologies. Figure 1.4 mboe/d Figure 1.4 Long–term GDP growth rates by components, 2022–2045 % p.a. 4 Labour productivity Working-age population Participation rate Employment rate GDP growth 3 2 1 0 Non-OECD OECD World –1 Source: OPEC. The increase in the working-age population will be another important demographic trend for most non-OECD economies. A young and vibrant population, coupled with advancements in education, healthcare and social support systems will play a pivotal role in driving future growth in these regions. World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 29 1 CHAPTER ONE Various economic regions and individual economies, particularly in advanced and maturing emerging economies, are expected to be significantly affected by a decline in the working-age population. This demographic shift is evident in regions like OECD Europe, OECD Asia-Pacific, and emerging markets such as Russia and China. As a consequence, these economies may face some constraints on their growth potential, despite forecasts of increasing labour productivity. The combination of a shrinking workforce and the need to support an ageing population can pose challenges to sustained economic development in these regions, requiring careful attention and strategic planning to mitigate the impact and help foster long-term growth. In regions like the Middle East, Africa, and OPEC, where labour productivity may be comparatively lower, the positive impacts of rapidly expanding populations, the rise of the middle class, and government-led investments in domestic economies play a crucial role. To some extent, these factors may help offset the productivity gap by providing a larger labour force, stimulating consumer demand and driving economic growth. Additionally, sovereign investments in key industries and infrastructure projects contribute to diversification, job creation and overall productivity. By leveraging these factors, and focusing on sustainable economic strategies, these regions can achieve better relative long-term economic resilience. In addition to the core factors already mentioned, several gradual changes observed over the medium-term will also influence the long-term economic landscape. One significant aspect is the potential positive impacts of digitalization, AI, and robotics on productivity growth. The increasing integration of technology and automation in various industries has the potential to enhance efficiency, streamline processes and improve overall productivity levels. As these advancements evolve and mature, they are expected to contribute to long-term economic growth and development. Embracing digitalization, AI and robotics can unlock new opportunities, reshape industries and drive innovation, further bolstering productivity in the years to come. This is a benefit that is likely to be seen more in advanced economies, rather than developing and emerging economies, at least at the beginning of the long-term period. Global GDP growth between 2022 and 2045 is expected to remain robust and increase at an average rate of 3% p.a. This is the same level as in the previous WOO edition and takes into account increasing global economic risks, and the uncertainties around high inflation and interest rates, rising debt levels and geopolitical tensions. Global growth to 2045 will be dominated by non-OECD countries (Table 1.5). This is in line with assumptions made in previous editions of the WOO. Even if the pace of GDP growth will slow slightly over the forecast period, these countries are expected to grow by an average of 3.8% p.a., due to improving labour productivity and an expanding working-age population. The growth dynamic for the entire forecasting period is expected to remain relatively consistent with the previous year’s WOO. Looking more closely at the OECD group of countries, economic growth is forecast to average 1.6% p.a. between 2022 and 2045. OECD Americas is the fastest growing OECD region with a long-term growth rate of 2% p.a. This takes into account the effects of monetary tightening and increased inflation. While growth expectations are comparably low in the medium-term at 1.5% p.a., rates in the periods 2028–2035 and 2035–2045 are expected to remain strong at levels of around 2.2%. This trend is supported by an increase in the size of the labour force as a result 30 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries KEY ASSUMPTIONS Table 1.5 Long–term annual real GDP growth rate % p.a. 2022–2028 2028–2035 2035–2045 2022–2045 OECD Americas 1.5 2.2 2.2 2.0 OECD Europe 1.4 1.5 1.1 1.3 OECD Asia Pacific 1.3 1.3 1.1 1.2 OECD 1.5 1.8 1.6 1.6 Latin America 1.9 2.2 1.8 1.9 Middle East & Africa 3.1 3.9 4.5 4.0 India 6.1 6.3 5.9 6.1 China 4.9 4.2 3.0 3.8 Other Asia 4.3 4.1 3.0 3.7 OPEC 3.0 3.1 3.2 3.1 Russia 1.0 1.4 1.2 1.2 Other Eurasia 2.5 2.5 2.3 2.4 Non–OECD 4.1 4.1 3.5 3.8 World 3.0 3.1 2.8 3.0 1 Source: OPEC. of immigration to the US and, to some extent, Canada. Further upside may come from labour productivity growth. OECD Europe is expected to follow a similar pattern, with a slowdown in the dynamism of the economy. A drop in the population, in general, and the labour force, in particular, supports this trend. While the conflict in Eastern Europe mainly affects the short-term outlook, rising inflation, interest rate increases and demographic challenges are expected to limit growth potential to 1.5% over the period 2028–2035, which then falls to 1.1% in the last decade of the outlook. The average annual growth rate over the forecast period is 1.3%, only slightly above the growth rate for OECD Asia-Pacific. In OECD Asia-Pacific, a deceleration of economic growth over time is expected. The strongest growth in this region is projected for the period 2022–2035 at an average annual rate of 1.3%. A shrinking labour force, due to an ageing population, and the projected economic maturation in China, the region’s main trading partner, drive the economic growth slowdown. Growth is set to drop to an average of 1.1% p.a. in the last decade of the forecast period, resulting in an average growth rate of 1.2% over the entire forecast period. In non-OECD regions, the Middle East & Africa, OPEC and Other Asia are expected to show accelerating long-term growth trends, with similar or even higher growth rates than China in the 2035–2045 period. Latin America is expected to see ongoing support from commodity markets and an expanding young population in most economies. However, the region’s economy may face downward pressure due to sluggish employment growth and limited productivity gains. World Oil Outlook 2023 Organization of the Petroleum Exporting Countries 31 CHAPTER ONE Despite the country’s robust economic fundamentals, Brazil’s long-term trend growth faces limitations due to insufficient domestic savings and a significant debt burden, which may require continual fiscal consolidation. The country will also likely encounter the challenge of a shrinking working-age population. From a structural perspective, the trend growth would benefit from the implementation of more ambitious reforms aimed at improving infrastructure, facilitating the ease of doing business and further developing its financial markets. Elsewhere in Latin America, Argentina is grappling with persistent structural issues, including high debt, a significant fiscal deficit and intense inflationary pressures. Comprehensive reforms are crucial to address Argentina’s weak macroeconomic fundamentals and stimulate the necessary investment to drive structural economic diversification, capital accumulation, and productivity. By implementing these reforms, Argentina has the potential to overcome the obstacles it faces and create a more favourable environment for sustainable and inclusive economic long-term growth. Latin America is projected to experience relatively higher growth in the early years of the forecast period, resulting in an average annual growth rate of 1.9% over the entire period. In the Middle East & Africa, growth is estimated to average 4% p.a. A young and expanding population and rising income levels, as more people enter the middle class, are expected to benefit the region and provide additional consumption abilities. As global growth picks up, the region should also benefit from support from commodity markets. Moreover, structural and economic reforms in less productive economies could provide further growth potential. These reforms would enhance economic complexity, improve competitiveness and increase labour participation. By diversifying their economies, focusing more on non-energy sectors, and prioritizing productivity improvements, these countries can boost their economic resilience. In turn, this would contribute to an increase in savings and investments, and help establish them as manufacturing hubs. However, rising debt levels, especially in low-income countries, pose a downside risk. China is anticipated to be the second fastest growing major economy, averaging 3.8% p.a. over the projection period. This steady momentum in the economic forecast is an outcome of the country’s ageing population and a maturing stage of domestic economic development that has moved onto a path of slowing growth. China’s growth pattern has become more volatile in the last few years, but it is expected to return to a more stable dynamic in the long-term. Considering the government’s successful track record in driving economic development, China is expected to continue to support economic development, if needed. This approach is anticipated to provide support to China during its ongoing transition phase, with a focus on achieving ‘high-quality’ sustainable growth, and hence, ensuring stability. Key priorities for the country include boosting domestic and external demand, promoting technological innovation, and effectively managing economic risks. Nonetheless, this transition is expected to be accompanied by various challenges related to addressing existing structural bottlenecks. It is also important to note that while population growth has played a role in China’s economic development, the expansion of human resources, characterized by a well-educated and healthy population, is the primary catalyst for sustained development. As China continues to invest in education and healthcare, its population is expected to become increasingly productive. 32 World Oil Outlook 2023 Organization of the Petroleum Exporting Countries KEY ASSUMPTIONS India is forecast to continue to be the fastest growing major non-OECD country, with an average growth rate of 6.1% p.a. Growth is expected to be strongest between 2028 and 2035, as the country benefits from a young and dynamic population, a growing middle class and continued, albeit reduced, fiscal stimulus. Despite notable prominence in selected sectors, such as IT and pharmaceuticals, India faces several structural, social, and political challenges that hinder its potential for accelerated growth. Addressing these challenges could significantly bolster the country’s resilience and, subsequently, advance its growth potential. The current assumption is that the implementation of structural reforms will likely be gradual, resulting in moderate productivity enhancements. At the end of the projection period, the Indian economy is expected to mature, with growth slowing to 5.9% p.a. for the 2035–2045 period. Long-term economic growth in Other Asia is at 3.7% p.a. Growth momentum peaks at 4.3% in the period 2022–2028, but the general growth trend is well maintained leading to an expansion rate of 3% in the last decade of the projection period. The growth trend in many countries is expected to be impacted by less favourable demographics, despite the improving prospects for productivity. Additionally, there is a need for improvements in institutions to support and enhance the growth potential effectively. Russia is currently impacted by sanctions and a recent economic downturn. The country is expected to overcome these challenges and recover relatively well over the long-term. As already mentioned, however, the demographic trend is anticipated to be unfavourable, with a decline in the working-age population. Over the long-term, the country’s declining population is set to be the main factor preventing growth from rising significantly above the modest long-term average of around 1.2%, especially if no further structural reforms are implemented. Nonetheless, labour productivity gains have the potential to offset this demographic development. Economic growth in Russia is expected to rise by 1.4% p.a. in the period 2028–2035, after relatively tepid medium-term growth of 1%. Developments in commodity markets, especially oil and gas, will play an important role in Russia’s growth trajectory. In this context, it is important to note that Russia is a country with a rich history of economic transformations. With benefits from vast resources, a skilled workforce, and a high potential for technological advancements, Russia has the opportunity to capitalize on these strengths and chart a new economic growth path through the implementation of structural reforms. Long-term economic growth in Other Eurasia is expected to average 2.4% p.a., supported by a slight increase in the working-age population. The expected increase in size of the world’s major economies (Figure 1.5) means that global GDP is projected to almost double, from around $138 trillion in 2022 to