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Opec warns market volatility caused by IEA comments

Opec chief Al Ghais said the group and its allies were not targeting oil prices but focusing on market fundamentals

Opec secretary general Haitham Al Ghais said the International Energy Agency (IEA) should be “very careful” about discouraging investment in the oil industry, which was vital for global economic growth.

Such comments could lead to oil market volatility in future, he said.

Al Ghais also said that the Organization of the Petroleum Exporting Countries (Opec) and its allies including Russia, a group known as Opec+, were not targeting oil prices but focusing on market fundamentals.

Finger pointing and misrepresenting the actions of the oil exporters and their allies was “counter-productive”, he said.

Fatih Birol, executive director of the International Energy Agency, has been critical of the Opec+ group’s surprise announcement earlier this month of production cuts of 1.66 million barrels per day (bpd) from May until the end of 2023.

Saudi Arabia’s energy minister Prince Abdulaziz bin Salman had said only two weeks prior to the decision that the group would stick to production cuts it had agreed in October until the end of the year.

Oil prices rose above $80 a barrel on the back of the decision, having fallen as low as $70 per barrel last month.

Birol, in an interview with Bloomberg this week, said Opec should be careful about pushing oil prices up as that would translate into a weaker global economy.

On Thursday, Al Ghais said blaming oil for inflation was “erroneous and technically incorrect” and that the IEA’s repeated calls to stop investing in oil is what would lead to market volatility.

“If anything will lead to future volatility it is the IEA’s repeated calls to stop investing in oil, knowing that all data-driven outlooks envisage the need for more of this precious commodity to fuel global economic growth and prosperity in the decades to come, especially in the developing world.”

Opec+ and the IEA have jousted in recent months over their outlooks for global oil supply and demand.

Saudi Arabia, Opec’s de-facto leader, has also blamed the Paris-based IEA and its initial predictions for a 3 million barrel per day (bpd) fall in Russian production on the back of the Ukraine invasion last year for Washington’s decision to sell oil from its reserves.

Prince Abdulaziz described the prediction as “screaming and scaring”.

Opec+ decided last year it would stop using data from the West’s energy watchdog when assessing the state of the oil market.