IEA warns of risks due to new OPEC+ oil supply cuts

MOSCOW, 13 Oct – PRIME. The new OPEC+ cuts announced in early October increase the risks to ensure the stability of energy security in the world, according to experts from the International Energy Agency (IEA).

“A massive cut in OPEC+ oil supplies increases energy security risks globally. Even with lower demand expectations, this will drastically reduce much-needed growth in oil inventories through the end of this year and into the first half of 2023,” the IEA writes in its new monthly report. .

Last week, the states included in the OPEC + agreement decided to reduce oil production by 2 million barrels from November, extending the deal until the end of 2023, which angered US President Joe Biden. The Alliance explained that when making the decision, it took into account the forecast and the risks of a slowdown in the global economy, which could reduce demand. The new parameters of the OPEC+ deal take into account the interests of both producers and consumers, according to the alliance.

The IEA estimates that the real OPEC+ cut will be around 1 million barrels per day, as many countries have already been producing below target levels, unable to increase production more. According to the agency, the main reduction will be in Saudi Arabia and the United Arab Emirates. A further drop in oil production in Russia is also expected in connection with the start of the EU embargo in December.

At the same time, the new reduction in OPEC + led to an increase in oil prices, increasing market volatility, the IEA notes. “Estimate crude oil prices are up about $14 a barrel from their September low and Brent is close to triple digits again. on the verge of recession,” the IEA said.

At the same time, the agency suggests that if in the past jumps in oil prices contributed to the growth of supplies from non-OPEC countries, then this time the situation may be different.

“U.S. shale producers, traditionally the most responsive to changing market conditions, are now grappling with supply chain constraints and inflation — and so as long as they maintain cost discipline. This casts doubt on assumptions that higher prices will necessarily balance the market through additional proposal,” the IEA says.