In response to the IEA’s warning made on Wednesday that OPEC should be careful not to cut too much production lest they jack up prices too high, the Organization of the Petroleum Exporting Countries (OPEC) issued a warning of its own to the IEA: your calls to stop investing in oil and gas is what could lead to future price volatility, OPEC said in a Thursday statement.
The IEA’s warning was simple: OPEC should be careful not to cut production too much, lest crude oil prices rise to the point where it stifles economic growth and pressures consumers into moving away from costly fossil fuels to renewable energy and EVs.
“The global economy is in a very fragile stage,” Birol said on Wednesday, adding that higher oil prices were “the last thing that we want.” Meanwhile, the IEA has spent the last few years becoming an unofficial champion of the energy transition movement.
OPEC declined to take the warning in stride, lashing out at the IEA with a press statement, arguing that “finger pointing and misrepresenting OPEC and OPEC+ actions is counterproductive,” stressing that blaming oil for inflation was erroneous and technically incorrect.
“The IEA knows very well that there are a confluence of factors that impact markets.” OPEC Secretary General Haitham Al Ghais said on Thursday. “The knock-on effects of Covid-19, monetary policies, stock movements, algorithm trading, commodity trading advisors and SPR releases (coordinated or uncoordinated), geopolitics, to name a few.”
“If anything will lead to future volatility, it is the IEA’s repeated calls to stop investing in oil, knowing that all data-driven outlooks envisage the need for more of this precious commodity to fuel global economic growth and prosperity in the decades to come, especially in the developing world.”
By Julianne Geiger for Oilprice.com
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1- In 2017 the then Saudi Energy Minister Khalid Al Falih publicly reprimanded Fatih Birol and told him during the annual World Economic Forum in Davos, Switzerland to stop hyping about US shale oil potential.
2- In 2018 he said that US shale oil production will hit 25 million barrels a day (mbd) by 2025 and will be bigger than the combined production of Saudi Arabia and Russia. Where is shale oil now? It is a spent force.
3- In 2021 Mr Birol called for an immediate halt to new investments in oil and gas in what became known as his net-zero emissions 2050 but Saudi Energy Minister Prince Abdulaziz bin Salman mockingly ridiculed his call calling it La-La-Land roadmap. Mr Birol later retracted his call asking OPEC+ to raise production in line of President Biden call.
4- Also in 2021 Mr Birol denied that the EU energy crisis was caused by hasty EU policies to accelerate energy transition at the expense of fossil fuels and blamed it on the Ukraine conflict and he repeated the claim in 2022 despite the fact that the EU energy crisis started 14 months before the Ukraine conflict came on the scene.
5- On Wednesday April 26, 2023 he warned that OPEC+ should be careful not to cut too much production lest they jack up prices too high when he should know that what is affecting oil prices isn’t lack of demand but fears that the collapse of some American commercial banks could lead to a global banking or a financial crisis.
6- OPEC+ told him that blaming oil for inflation was erroneous and technically incorrect particularly that inflation was caused by rising energy prices resulting from the EU energy crisis and not OPEC+s production policies.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert