OPEC+ Oil Supply Cuts Could Tip The World Into Recession: IEA
Last week OPEC+ expressed that they will cut oil production by the largest amount since the beginning of the pandemic, and this might knock down the global economy: the International Energy Agency pointed out.
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OPEC+’s decision to slash oil production by a substantial amount has led to a state of fury and distress among the Western governments. The cartel’s decision has a big chance to tip the world economy over the edge, says International Energy Agency.
CNN reported on Thursday, the Paris-based agency pointed out in its monthly oil market report that, “With unrelenting inflationary pressures and interest rate hikes taking their toll, higher oil prices may show to the tipping point for a global economy to all time on the brink of trough .”
The forecast for world oil demand growth next year, which IEA earlier released, saw a cut-down of 20 percent. The International Monetary Fund noted this week that, “2023 for many people might feel like a recession.” IEA slashed its GDP growth forecast from an earlier prediction of 3.2 percent to 2.7 percent.
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The supply cuts by Saudi Arabia and other major oil-producing countries might cause a sharp decline in global oil stocks and keep the prices raised.
The IEA reported to CNN, “The massive cut in OPEC+ oil supply increases energy security risks worldwide.”
The White House cited Saudi Arabia for aligning with OPEC+ member Russia, in the midst of the decision taken by the cartel to mark down oil production by 2 million barrels a day, which is equivalent to 2 percent of the global oil demand. This has placed the White on a collision course with Saudia Arabia.
Brent crude oil dipped to $20 per barrel during the early days of the pandemic. The US oil prices, on the other hand, turned to a negative value causing bankruptcies across the gas and oil industries.
The IEA noted, “This casts doubt on advice that higher prices will be needed balance to the market between additional supply. give growth is set to “slow markedly” in 2023, even if still to reach a record of 100.6 million an barrels a day.”
The IEA mentioned that the world oil demand is forecaster to be an average of 101.3 million per day in 2023.