IEA says OPEC’s decision to cut output could cause a global recession

In its monthly report on the oil market released this Thursday, the IEA specifically stated that “big cut“The oil cartel’s output is up to two million barrels per day as of November, equivalent to 2% worldwide, which has already resulted in an increase of about $14 per barrel compared to September lows.

“With continued inflationary pressures and increases in interest rates–warning– rising oil prices It could be a turning point for a world economy that is already on the verge of recession”.

The agency, which brings together most OECD countries, emphasizes that the so-called OPEC+ plan has already reduced global oil demand, which it calculates will be lower in the fourth quarter, with the expected economic disruption. 340,000 barrels per day compared to the same period in 2021.

This means it is expected to remain at 99.6 million barrels per day for the whole of 2022. 60,000 barrels less than estimated last month.

The correction in the last report is much steeper, with 470,000 bpd for 2023. Thus, consumption will remain at 101.26 million barrels per day, significantly below the 102.02 million OPEC announced in its latest revision of the figures presented this Wednesday.

IEA blamed OPEC

After all, the increase in global oil consumption in 2023 It will remain at 1.7 million barrels compared to 2022and that would be a lower increase of the 1.9 million expected this year, and most of all, the 3.2 million calculated before the Russian invasion of Ukraine came in at the end of February.

The IEA blames the oil cartel and its Russian partners. causing a real stir in the market With last week’s decision to get less raw.

On the one hand, he fears that the rise in prices these days may not translate into an increase in pumping by other producing countries.

First, U.S. shale gas companies, traditionally the most reactive in similar circumstances, are now supply chain issues and their costs increase in a way that does not comply with the financial discipline rules that their investors impose on them.

Stop the rebuilding of reserves

In addition, expectations for a lower demand “substantially” interrupting the process of replenishing “much-needed” reserves for the remainder of this year and the first half of 2023.

It should be noted that at the end of August, industrial reserves in OECD countries were 2.736 million barrels, 243 million barrels below the average of the last five years.

reservations would be “significantly” lower Had the governments of IEA members not chosen to put 185 million barrels on the market between March and August to ease tensions, the IEA recalls.

The authors of the report point out that the current cut of OPEC+ from November will not be two million barrels per day (the maximum amount stipulated in the agreement), but around one million as most of the cartel countries are producing. clearly below the quotas allocated to them.

Most of the cuts will be covered by Saudi Arabia and the United Arab Emirates (UAE). They can also come from Russia as of December, when the European Union’s embargo on Russian oil came into effect.