The Secretary General of the Organization of the Petroleum Exporting Countries(OPEC), Haitham Al Ghais, has warned the International Energy Agency(IEA) against discouraging investment in the oil industry.
Repeated calls by the IEA to stop oil investments: market volatility ahead?
Al Ghais said the industry is critical to global economic growth and that the IEA’s comments could lead to market volatility in the future. The OPEC leader stressed that OPEC+ was not targeting oil prices but focusing on market fundamentals. He also criticized accusations and distortions of the actions of oil exporters and their allies.
The warning comes after IEA Executive Director Fatih Birol criticized the OPEC+ group’s announcement to cut production earlier this month. Birol had warned OPEC that higher oil prices would result in a weaker global economy. He also said that the IEA’s repeated calls to halt oil investments would lead to market volatility.
The OPEC+ group had surprised the market with the announcement of production cuts of 1.66 million barrels per day from May until the end of 2023. The decision came just two weeks after Saudi Energy Minister Prince Abdulaziz bin Salman said the group would adhere to production cuts agreed in October until the end of the year. The announcement caused oil prices to rise above $80 a barrel, from a low of $70 a barrel last month.
OPEC+ and IEA to work together to find sustainable, balanced and environmentally friendly solutions
OPEC+ and the IEA have differing views on the outlook for global oil supply and demand. Saudi Arabia, the de facto leader of OPEC, blamed the IEA for Washington’s decision to sell oil from its reserves. Prince Abdulaziz called the IEA’s initial forecast of a 3 million barrel per day drop in Russian oil production following last year’s invasion of Ukraine “screaming and scary.” OPEC+ decided last year to stop using the Western Energy Observatory data to assess the state of the oil market.
The recent tensions between OPEC+ and the IEA highlight the differences of opinion on the oil industry, its prospects and its impact on the global economy. While OPEC+ focuses on market fundamentals, the IEA highlights the risks of price volatility and calls for a faster energy transition. It is important that both sides work together to find sustainable, balanced and environmentally friendly solutions to global energy challenges while ensuring equitable and stable economic growth.
