IEA warns that high oil prices are hurting economy, seeks additional supply for refiners
The governing board of the International Energy Agency (IEA) says it has serious concerns that that the rise in oil prices is constraining the global economic recovery.
In a statement issued on Thursday, the board said there was a “clear, urgent need for additional supplies on a more competitive basis to be made available to refiners to prevent a further tightening of the market”, particularly given the normal seasonal increase in demand from May to August.
“Despite a near-10% correction since 5 May, oil prices remain at elevated levels driven by market fundamentals, geopolitical uncertainty and future expectations,” the agency said.
“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,” the statement continued.
“Oil importing developing countries are most likely to be seriously affected by high oil prices, undermining their economic and social well-being.
Following a regular quarterly IEA board meeting from May 18-19, officials said they “urge action from producers that will help avoid the negative global economic consequences which a further sharp market tightening could cause, and welcome commitments to increase supply.”
Some negative global economic consequences are already present, such as widening global imbalances, reduced household and business income, and upward pressure on inflation and interest rates, the board said.
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