By Nicholas Earl
OPEC’s war of words with the International Energy Agency entered another heated chapter today, with the cartel warning the Paris-based climate group against undermining investment in the oil industry.
OPEC’s general secretary Haitham Al Ghais argued the IEA should be “very careful” about discouraging investment in the oil industry, which he said was vital for global economic growth.
He feared the IEA’s position – that there can be no new fossil fuel developments in order to combat climate change – could lead to oil market volatility in future and accused the IEA of “finger pointing” which was “counter-productive.”
The IEA also said OPEC’s recent surprise output cut risked nudging inflation higher, which Al Ghais said was “erroneous and technically incorrect”.
“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,” he said.
Oil prices rose above $80 per barrel on the back of OPEC’s surprise cut across both major benchmarks, having fallen as low as $70 per barrel last month.
OPEC and its allies including Russia, a group known as OPEC+, have consistently argued they did not slash output to prop up prices, but instead to support market fundamentals amid capacity constraints and reduced demand in volatile economic conditions.
However, the surprise cut earlier this month came on top of OPEC’s decision last November to slash output by 2m barrel per day, which drew criticism from the IEA and the US.
At the time, the White House effectively accused OPEC of collaborating with Russia to keep oil prices high, with the country remaining a member of the cartel’s extended organisation.
OPEC+ and the IEA have also jousted in recent months over their differing outlooks for global oil supply and demand.
Last year, Saudi Arabia blamed the IEA for the US’ decision to sell oil from its reserves.
The de-facto OPEC leader blamed the IEA’s initial predictions for a three million barrel per day fall in Kremlin-backed production after the country’s invasion of Ukraine.
Saudi Energy Minister Prince Abdulaziz bin Salman hammered the prediction as “screaming and scaring”.
OPEC+ also decided last year it would stop using data from the West’s energy watchdog when assessing the oil market.
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