Categories: Business

OPEC+ Oil Supply Cuts could Tip World into Recession, IEA Says

A decision by the OPEC+ oil producer group last week to rein in output has driven up prices and could push the global economy into recession, the International Energy Agency said on Thursday.

“The relentless deterioration of the economy and higher prices sparked by an OPEC+ plan to cut supply are slowing world oil demand,” the Paris-based agency, which includes the United States and other top consumer countries, said.

“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,” it added in its monthly oil report.

The warning from the agency highlights a rift with Saudi Arabia, the world’s top oil exporter, and OPEC’s de facto leader.

U.S. President Joe Biden vowed unspecified “consequences” for relations with Saudi Arabia after the OPEC+ move, but Riyadh rejected the criticism and said the move was not political and aimed at balancing the market and curbing volatility.

Demand/supply balance

Actual supply losses will likely be around 1 million barrels per day and not the 2 million barrels announced by the OPEC+ bloc, which unites the producer club and allies like Russia, the IEA said.

Capacity constraints plaguing output in other OPEC members mean Saudi Arabia and the United Arab Emirates will deliver most of the reductions, the IEA said, while new G7 and European Union sanctions on Russia could further tighten global supply.

The EU this month endorsed a plan by the G7 club of wealthy nations to impose a cap on prices for Russian oil exports, a complex set of new global sanctions aimed at depriving Moscow of revenue for its invasion of Ukraine.

Any big disruption to Russian oil flows even to non-EU and non-G7 buyers could raise prices worldwide, however, and heap economic pain on citizens of the sanctioning countries already grappling with high inflation and costs of living.

Reuters

Follow us on:

AriseNews

Recent Posts

Nigeria Announces Public Holidays for Christmas and New Year Celebrations

Federal Government of Nigeria has declared public holidays to mark Christmas and New Year festivities…

4 minutes ago

IGP Orders Investigation into Death of Ilorin Detainee Jimoh Abdulquadri in Police Custody

IGP Egbetokun has ordered an investigation into Jimoh Abdulquadri’s death in police custody, promising justice…

3 hours ago

Trump Dismisses Claims That Elon Musk Holds Real Power Behind US President-Elect

Donald Trump has rejected suggestions that Elon Musk is the true influence behind the newly…

3 hours ago

Tiger Woods’ 15-Year-Old Son Charlie Achieves His First Hole-in-One

Tiger Woods' son Charlie has achieved his first golf hole-in-one during the final round of…

3 hours ago

New Zealand Rejects Cook Islands’ Bid For A Separate Passport

New Zealand has rejected the Cook Islands’ proposal for a separate passport, requiring full independence…

4 hours ago

Honda, Nissan Eye Major Merger, Aim to Finalise Deal by 2025

Honda and Nissan plan a merger to create the world’s third-largest automaker, aiming to finalise…

4 hours ago