World set for cheaper energy on shift from oil and gas

Key takeaways:

– In its 2024 WEO,  the IEA forecasts peak fossil fuel demand by 2030, though these are scenarios dependent on uncertain policies. A peak does not mean the end of fossil fuels; demand could plateau for years, with a slow decline.

– The wide range of assumptions—mainly regarding policies, which are, as the IEA states, facing more uncertainty than usual—leads to significantly different outcomes.

– The outlook for oil exporters does not depend only on their production costs but also on their carbon intensity. In a climate-conscious world, low-carbon production will be critical.

– The second half of the 2020s may see excess oil and gas supplies, pushing prices lower. This could lead to prolonged lower prices and altered investment strategies.

–  OPEC has downgraded its forecast for three consecutive months. Still, gap with the IEA remains around 1 Mb/d.

– Despite geopolitical tensions in the Middle East, no supply disruptions have occured.

– In the event of a worsening geopolitical outlook, price spikes are possible. However, the key question is not how high prices will go, but how long we would remain in the high prices territory.