IEA: OPEC+ production cuts could intensify 'strains' in global markets

Representatives of OPEC member countries attend a press conference after the 45th Joint Ministerial Monitoring Committee in Vienna, Austria, on October 5, 2022 [VLADIMIR SIMICEK/AFP via Getty Images]

The International Energy Agency (IEA) said yesterday that the oil production cuts announced by the OPEC+ group over the weekend could increase the “strains” in the market and push oil prices higher amid “inflationary pressures” that are “hurting vulnerable consumers … in emerging and developing economies.”

“The significant new cuts in oil production announced by OPEC+ countries come during a period ofheightened uncertainty for global oil markets and concerns about the outlook for the world economy,” the Paris-based agency said in its statement.

Global oil markets were already heading for scarcity in the second half of 2023 with the possibility of a significant supply deficit, IEA added.

“The new OPEC+ cuts risk exacerbating those strains and pushing up oil prices at a time when strong inflationary pressures are hurting vulnerable consumers around the world, especially in emerging and developing economies.”

Members of the OPEC+ alliance on Sunday announced a voluntary reduction in their crude oil production from May until the end of 2023, in the largest production cut since the decision of the OPEC+ producers in October 2022 to reduce production by two million barrels per day. The OPEC members said the move was “a precautionary measure aimed at supporting the stability of the oil market.”

READ: Why is OPEC cutting oil output?

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