Recession Due To OPEC+ Oil Output Cut? IEA Says It May Be Tipping Point For Pushing Global Economy Into Recession
- With unrelenting inflationary pressures and interest rate hikes, higher oil prices may prove the tipping point for a global economy already on the brink of recession, the International Energy Agency (IEA) said.
- Last week OPEC+, led by Saudi Arabia and Russia, announced to cut its oil production targets by 2 million barrels a day,
- "The relentless deterioration of the economy and higher prices sparked by an OPEC+ plan to cut supply is slowing world oil demand," the agency said.
- The decline in OPEC+ supply will be smaller than the announced 2 million b/d. IEA estimate is for a decrease of around one mb/d in OPEC+ crude oil output from November, with the bulk of the cuts delivered by Saudi Arabia and the UAE.
- Oil demand is now expected to contract by 340 kb/d Y/Y in 4Q22, IEA added its monthly oil report.
- For 2022, world oil demand growth has been further reduced to 1.9 mb/d from 3.2 mb/d expected before Russia invaded Ukraine.
- Global refining activity is responding to the slowdown in demand and lower refinery margins, with 3Q22 runs coming in lower than expected.
- The agency's Q4 2022 and 2023 forecasts have been revised down by 340 kb/d and 720 kb/d, respectively, following demand downgrades and OPEC+ production cuts.
- Runs are expected to increase by 2.2 mb/d in 2022 and 1.2 mb/d next year.
- Photo by Gerd Altmann from Pixabay
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