Oil prices have soared about 20% since late June but they could go even higher this year if the OPEC+ alliance sticks to its policy of restraining crude production, the International Energy Agency (IEA) said Friday.
In April, the Organization of the Petroleum Exporting Countries (OPEC) plus allies including Russia, pledged to slash output by more than 1.6 million barrels a day through the end of the year in a bid to lift falling oil prices.
This was followed in July by the announcement of additional cuts by Saudi Arabia — the world’s biggest exporter of crude oil — and an extension of the OPEC+ targets through the end of 2024.
The combined cuts, together with higher demand for oil, have already forced a sharp drawdown of reserves, the IEA said in its monthly oil market report.
If OPEC+ maintains its current production targets, oil inventories could shrink by 2.2 million barrels per day in the third quarter and by 1.2 million barrels in the fourth, “with a risk of driving prices still higher,” the agency wrote.
The IEA reiterated its previous forecast that global oil demand will rise by an average of 2.2 million barrels per day this year to a record 102.2 million barrels per day.
Rising oil prices have caused a recent jump in US gasoline prices, which hit an average of $3.84 a gallon Friday. Natural gas prices have also climbed recently, driven by fears that strikes in Australia could reduce exports of liquefied natural gas.
The upward pressure on oil prices could ease next year. The IEA predicts that demand growth will slow to 1 million barrels per day in 2024 as the post-pandemic recovery will have “largely run its course and as the energy transition gathers pace.”
The world’s appetite for oil is likely to peak in the next few years, the agency projected in June, pointing to stricter fuel efficiency standards, growth in the electric vehicle market and structural changes to economies, CNN reports.
