IEA Urges Middle East Oil Producers To Increase Supplies
As fuel prices remain high, the International Energy Agency (IEA) has urged oil producers in the Middle East to increase supplies to help keep prices down.
The IEA wants Middle East oil producers to increase oil production to keep fuel prices down and prevent any damage to the global economy. If countries such as Saudi Arabia increase production the IEA said it would use “all tools that are at the disposal of its members” to help.
The IEA request came at the quarterly meeting of the governing body of the IEA. It’s thought the request will put pressure on OPEC countries when they next meet in 3 weeks.
Members of the IEA said in a statement “The governing board urges action from producers that will help avoid the negative global economic consequences which a further sharp market tightening could cause, and welcomes commitments to increase supply. Additional increases in prices at this stage of the economic cycle risk derailing the global economic recovery and are neither in the interest of producing nor of consuming countries”.
After two weeks of falling crude oil prices they have started to go up again. Crude oil prices are still “at elevated levels” due to political uncertainty in oil producing countries, market fundamentals and future forecasts.
One reason believed to be behind the rise in oil prices is the drop in the amount of stored oil in US refineries but the dollar has also been strong recently which has helped to increase prices.
It’s easy to see how oil prices can affect petrol prices but high oil prices also affect businesses and there’s concern that if prices continue to rise we’ll end up with another global recession. High fuel prices have a detrimental effect on transport businesses with much of their costs being made up with the cost of fuel. Add that to increases in business electricity prices and business gas prices and businesses begin to suffer and that’s why there’s a call for OPEC to increase output.
However, there’s also concern that we have reached or about to reach peak oil – the point at which the world can no longer produce any more oil.
It’s been suggested that OPEC will agree to increase production but there are members of OPEC who suggest that high oil prices are nothing to do with how much oil is being generated and that it’s down to speculators.
It’s therefore just a matter of waiting to see if OPEC countries agree to increase oil production. Even if they do though, it seems likely that we will be stuck with high fuel prices for some time.