IEA should be ‘very careful' about undermining oil industry investments, Opec chief says

Blaming oil for inflation is 'erroneous and technically incorrect', says Opec secretary general

Haitham Al Ghais, secretary general of Opec, at India Energy Week 2023 in Bengaluru, India. Bloomberg

The International Energy Agency should be “very careful” about undermining investments in the oil and gas industry, Opec secretary general Haitham Al Ghais said on Thursday.

Opec and Opec+, which includes 23 oil-producing countries, are focusing on oil market fundamentals and investments, not crude prices, Mr Al Ghais said in a statement sent to The National by an Opec representative.

“The IEA knows very well that there are a confluence of factors that impact markets," he said.

"The knock-on effects of Covid-19, monetary policies, stock movements, algorithm trading, commodity trading advisers and SPR [Strategic Petroleum Reserve] releases, geopolitics, to name a few."

The Opec statement comes after agency executive director Fatih Birol's criticism of the group’s announcement earlier this month of output cuts of 1.66 million barrels per day from May until the end of this year.

In an interview with Bloomberg on Wednesday, Mr Birol said that Opec should be "careful” about bolstering oil prices as it could hurt the global economy.

Brent, the benchmark for two thirds of the world’s oil, surged past $80 a barrel earlier this month following the Opec+ move. The international benchmark has since given up all of its gains amid growing fears of a recession.

Brent was trading 0.36 per cent higher at $77.97 a barrel at 7.46pm UAE time on Thursday.

Mr Al Ghais also warned against “misrepresenting” the group’s actions and said that blaming oil for inflation was “erroneous and technically incorrect”.

“Other energy markets have been far more volatile … with oil markets less so, mainly due to the stabilising role of Opec and the Opec+ group,” Mr Al Ghais said.

“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.”

Annual upstream oil and gas spending needs to rise by 28 per cent to reach $640 billion by 2030 to ensure adequate global supplies, according to the International Energy Forum.

Oil and gas upstream spending surged by 39 per cent in 2022 to $499 billion, the highest level since 2014, the forum said.

The agency expects global oil demand to rise by 2 million bpd to a record 101.9 million bpd this year as China, the world's largest crude importer, reopens its economy after adhering to a strict zero-Covid policy for nearly three years.