Peak oil demand isn’t on the horizon, Opec says

In its annual report on long-term energy trends, the cartel said oil demand is forecast to reach 120.1 million barrels a day in 2050 from 102.2 million barrels a day last year. Demand from non-OECD countries is projected to rise by 28 million barrels a day in the period, while OECD nations are expected to witness a 10% growth decline.

“There is no peak oil demand on the horizon," OPEC said.

Rising consumption would be a boost for the group’s 12 members, whose income is heavily dependent on oil. The organization, which publishes closely-watched oil supply and demand forecasts, has been typically more optimistic than others about the continued use of oil.

Earlier this year, the International Energy Agency—which represents a group of oil consumer countries including the U.S.—said global oil markets are headed toward a major glut this decade due to surging supplies and slowing demand, with oil demand growth set to peak by 2029.

According to OPEC’s forecast, oil demand is estimated to reach 112.3 million barrels a day in 2029, a 10.1 million barrels a day increase compared with last year. Non-OECD oil demand is projected to rise by 9.6 million barrels a day between 2023 and 2029, reaching more than 66 million barrels a day, while OECD demand is expected to fall by 500,000 barrels a day.

In order to meet demand growth, investment in the oil sector needs to be significant in the coming years, OPEC said, reaching an estimated total of $17.4 trillion between now and 2050, or around $640 billion per year on average.

Oil and gas are expected to remain crucial for energy supply through the middle of the century, with their combined share in the energy mix expected to stay above 53%, according to OPEC. Oil is set to account for 29.3% of it, with the bulk of demand growth coming from the petrochemicals, road transport and aviation sectors.

Tuesday’s report comes as oil prices have found short-term support from elevated tensions in the Middle East, new hurricane threats in the U.S. and a fresh round of fiscal measures in China. Brent crude, the international oil benchmark, was recently trading around $75 a barrel, while the U.S. oil gauge West Texas Intermediate was around $72 a barrel.

Israel’s latest airstrikes on Iran-backed militant group Hezbollah in Lebanon have raised fears of a wider war that could seriously disrupt supply, while a major hurricane looms over the U.S. Gulf of Mexico, threatening production. Meanwhile, China injected fresh support for the economy on Tuesday, boosting the wider commodities complex as lackluster demand in the top crude importer has been a major drag on prices over the last few months.

Still, oil prices are down around 4% on the month, capped by persistent concerns over Chinese consumption trends and the prospect of increased supplies from OPEC and its allies.

Global demand for all forms of energy is set to expand by 24% in the period to 2050, reaching 374 million barrels of oil equivalent a day in 2050 from 301 million barrels of oil equivalent a day in 2023, OPEC said. Demand will be driven by developing countries, which are projected to see an increase of 73.5 million barrels of oil equivalent a day, with around 30% of non-OECD growth coming from India alone.

The cartel said its forecast of global oil demand stems from its expectation of strong population and economic growth through the middle of the century. The cartel forecasts the global population will grow to 9.7 billion by 2050 from just over 8 billion currently, mainly driven by a substantial demographic surge in non-OECD regions.

Global economic growth is also set to grow robustly, with an average annual increase of 2.9% a year between 2023 and 2050. Non-OECD countries are set to expand at an annual rate of 3.7%, while OECD nations are expected to experience a more modest annual growth of 1.6%.

With the exception of coal, demand for all primary fuels is set to grow through 2050. The largest increase is expected to come from renewables—mainly wind and solar—followed by natural gas, while coal demand is forecast to fall due to stricter regulations.

OPEC said the world still needs to ramp up efforts to reduce emissions, improve efficiencies, and introduce low-carbon solutions through investment in technology such as carbon capture and clean hydrogen.

Yet, climate action shouldn’t come at the expense of global energy security, OPEC said. “While energy policy ambitions remain high, the outlook expects greater scrutiny and pushback on some overly ambitious policy targets."

OPEC said supply from countries not participating in the Declaration of Cooperation—the formal name for OPEC+—is projected to increase by 7.1 million barrels a day between 2023 and 2029, reaching 58.8 million barrels a day by the end of the decade. Supply growth is then expected to slow in the long-term, to 57.3 million barrels a day in 2050 from 51.7 million barrels a day in 2023.

Supply from the OPEC+ alliance is, instead, projected to grow to 53.8 million barrels a day in 2029 from 50.3 million barrels a day last year, and reach 62.9 million barrels a day by 2050. According to the cartel, that means the group’s share in global liquids supply will rise to 52% in the middle of the century from 49% in 2023.

Write to Giulia Petroni at giulia.petroni@wsj.com