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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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IEA Chief: OPEC+ May Have To Rethink Its Decision To Cut Oil Production

  • According to the Executive Director of the International Energy Agency, OPEC+ may soon have to rethink its decision to cut production.
  • The comment followed an earlier IEA report that suggested the OPEC+ cut may well have made a recession inevitable.
  • The IEA believes energy security requires investment in fossil fuels but is unsure that higher prices will lead to more investment and production.

The OPEC+ group may have to “rethink” its decision to slash their collective oil production target by 2 million barrels per day (bpd) from November as it further stokes inflation and worsens the economic outlook for oil-importing developing nations, Fatih Birol, the Executive Director of the International Energy Agency (IEA), told Bloomberg on Wednesday.

“The recent decision of OPEC+ to cut the production by 2 million barrels a day was definitely not helpful,” Birol said, commenting on the global economic prospects.  

The OPEC+ decision may need a rethink, he told Bloomberg on the sidelines of the COP27 climate summit in Egypt.

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The cut in production increases energy security risks worldwide and could lead to higher oil prices that could be the tipping point for a global recession, the IEA said in its Oil Market Report for October, describing the OPEC+ cut as one of the multiplying “disruptive market forces.”

“Disruptive market forces are multiplying as the world struggles to navigate the worst global energy crisis in history. The OPEC+ bloc’s plan to sharply curtail oil supplies to the market has derailed the growth trajectory of oil supply through the remainder of this year and next, with the resulting higher price levels exacerbating market volatility and heightening energy security concerns,” the agency said.

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“With unrelenting inflationary pressures and interest rate hikes taking their toll, higher oil prices may prove the tipping point for a global economy already on the brink of recession,” the IEA added in its report last month.

The agency also expressed doubts that the current high prices would incentivize an investment and supply response from non-OPEC producers, considering that U.S. shale keeps discipline and faces supply-chain issues and cost inflation.

Global energy security requires continued investment in fossil fuels, alongside major investments in renewables, Birol told Bloomberg today. That’s a stark contrast from the IEA’s 2021 warning that if the world is to reach net zero by 2050, it wouldn’t have to invest in new oil and gas supply after 2021.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on November 09 2022 said:
    OPEC+’s cut was intended first and foremost to keep the global oil market and prices stable. Therefore, the claim by the Executive Director of the IEA Fatih Birol that the OPEC+ cut stokes inflation and worsens the economic outlook for oil-importing developing nations is as usual wrong. Moreover, OPEC+ should ignore his suggestion that it should rethink its cut. He and the IEA will be the last people OPEC+ will seek advice from having earlier dropped the IEA as a source of data because of its bias and inaccurate information.

    It is the green policies of the Western countries that caused the global energy crisis leading to higher oil prices by creating shortages in the market, stoking inflation pressures and precipitating global recession. These have been exacerbated further by Western sanctions on Russia and by the G7 and the EU embargoing Russian crude oil exports and capping the prices of Russian oil and gas exports.

    The IEA and its director are known for getting things wrong most of the time. Fatih Birol is now saying that global energy security requires continued investment in fossil fuels when he was the one who called in 2021 for an immediate halt to investments in oil and gas if the world is to reach net zero by 2050, a roadmap labelled by the Saudi Energy Minister Prince Abdulaziz bin Salman mockingly as the La-la-land roadmap.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • John de speville on November 09 2022 said:
    Mamdouh Salameh is 100% right .It is the pure corruption and stupidity of the western countries to believe that renewable like wind power, solar and batteries can replace the load power needed to manage any industrial country anywhere in the world.All the batteries manufactured in the world every year will last only 3 minutes if connected to the grid.It cost a lot more and use more energy to manufacture these renewable toys than one can get out of them.Renewable will NOT replace fossil fuel for at least another 50 to 75 years with much better quality batteries costing 1/10 the price and charging within 5 minute and lasting over 24 hours on one load.Lithium Ion would never be able to do the job the way the are now.solar panel would need to be at least 85% efficiency and not 25% they are now and they will need to be at least 75% less to manufacture.There would be not enough cobalt and other rare metals to manufacture 80 millions batteries needed for all the cars every year.Renewable is a folly and new way for our corrupt incompetent government to screw us with another tax back to the stone ages.

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