• Tuesday, Dec 07, 2021
  • Last Update : 09:29 am

IEA urges OPEC to take 'necessary steps' to lower oil prices

  • Published at 07:24 pm November 25th, 2021
3d-printed-oil-pump
A 3D printed oil pump jack is seen in front of displayed stock graph in this illustration picture, April 14, 2020 Reuters

OPEC nations and their allies, including Russia, agreed in July to slowly increase their oil output each month towards pre-pandemic levels as the world economy recovers from the Covid-19 pandemic

The head of the International Energy Agency on Wednesday called on OPEC and its allies to take measures to help bring oil prices down to "reasonable levels".

"I very much hope to see in the next meeting or meetings they... make the necessary steps in order to comfort the global oil markets and help bring the prices down at reasonable levels," Fatih Birol told reporters.

The head of the IEA, which unites oil consuming nations, also took aim at Russia over gas.

"Russia can easily increase exports to Europe about 15 percent... and significantly comfort the European gas markets," said Birol.

Natural gas prices in Europe have surged this year and Russia, the region's major supplier, has been slow to step up deliveries.

OPEC nations and their allies, including Russia, agreed in July to slowly increase their oil output each month towards pre-pandemic levels as the world economy recovers from the Covid-19 pandemic.

They have declined to move faster despite a jump in prices to over $80 per barrel, a level that many analysts worry could undermine the global economic recovery.

They are due to review their strategy at a meeting in December. 

'Hypocritical'

The United States and a handful of other oil consuming nations announced on Tuesday releases of supplies from their strategic petroleum reserves.

The move is aimed at blunting soaring prices at the pump that are biting into consumers' pocketbooks and pushing up transportation costs.

"The rise in oil prices is placing a burden on consumers in these countries and also in several emerging countries," Birol said.

"It also puts additional pressure on inflation in a period where economic recovery remains uneven and still faces a number of risks," he added.

Inflation is pushing central banks towards raising interest rates, a move which would slow the global economic recovery as well as dent oil demand.

Global crude prices rose following the announcement of the releases from strategic reserves as the move was less ambitious than anticipated.

Birol added the releases were not a collective response by IEA members, which he said have happened only three times due to major supply shocks like the 1991 Gulf War, Hurricane Katrina and the Libyan civil war.

Analyst Phil Flynn with Price Futures Group told AFP he believes the IEA was trying to provide political cover for the US administration by putting the blame on OPEC and its allies.

He added that "it's hypocritical of the IAE to the point finger at OPEC when their own agency was suggesting to cut back on fossil fuel" use in order to meet climate targets.

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