Oil Advocates Emphasize Pragmatic Energy Transition Amidst Continued Demand Growth

Haitham Al-Ghais, the secretary-general of the Organization of the Petroleum Exporting Countries (OPEC), has dismissed calls for a complete transition away from oil in favor of renewable energy as “wrong” and “unrealistic.”

In an interview with the Kuwait News Agency, Al-Ghais argued that oil remains indispensable to modern life, constituting 31 percent of the global energy mix. He emphasized that even renewable energy technologies, such as wind turbines and solar panels, rely on oil products in their manufacturing processes.

Highlighting the advantages of oil in extraction, refining, and transportation, Al-Ghais underscored its crucial role in the global economy since its discovery. He elaborated on oil’s integral role in essential daily activities such as transportation, energy production, and manufacturing, emphasizing the challenges of completely abandoning it.

Echoing these sentiments, Amin H. Nasser, President and CEO of Aramco, emphasized the need for a pragmatic approach to the energy transition that acknowledges the enduring importance of oil and gas. Speaking at CERAWeek 2024 in Houston, Texas, Nasser criticized current transition strategies for failing to displace hydrocarbons at scale, stressing the continued growth in global oil and gas demand.

Nasser called for abandoning the idea of phasing out oil and gas in favor of investing in them adequately while simultaneously ramping up efforts to reduce carbon emissions and promote lower carbon solutions. He emphasized the importance of introducing new energy sources and technologies only when they are economically competitive and supported by the necessary infrastructure.

OPEC anticipates strong growth in global oil demand in the coming years, driven primarily by robust economic activities in China. The organization forecasts a rise in oil demand of 2.25 million barrels per day in 2024 and 1.85 million barrels per day in 2025. Factors such as continued economic growth in China, recovery in global air travel, and demand for petrochemical feedstock are expected to drive this growth.

Improvements in airline activities and road mobility are projected to support the demand for jet oil, kerosene, and gasoline among member countries of the Organisation for Economic Co-operation and Development (OECD).

Overall, OPEC’s recent report highlights the resilience of oil demand, driven by strong economic activity, particularly in non-OECD countries, following the rebound from COVID-19-related lockdowns, particularly in China.