OPEC should be wary of raising oil prices as it could hurt the global economy and accelerate the transition from fossil fuels to clean energy, the International Energy Agency said.
Saudi Arabia and other key OPEC+ nations shocked global oil markets by announcing further production cuts earlier this month, prompting a brief rally in prices. The intervention could backfire on the Organization of the Petroleum Exporting Countries, as higher prices could reduce demand for fuel and push consumers toward electricity and other renewable energy sources, according to the executive director of the ‘AIE, Fatih Birol.
“They have to be very careful,” Birol said in an interview with Bloomberg Television. “If oil producers try to drive up prices, that will only accelerate the penetration of electric cars.”
A Paris-based IEA report published on Wednesday showed that the transition is already underway, with almost one in five new cars sold worldwide this year being electric. This compares to just 2% in 2019.
By 2030, 60% of all new cars sold in the US, China and Europe — the three largest markets — will be electric, according to the IEA report.
OPEC officials have said the supply curbs agreed this month were necessary to safeguard oil markets against aggressive and unjustified short selling by speculators. Crude oil prices have largely pared gains since the cuts were announced, trading near $80 a barrel in London.
However, Birol countered that the intervention was not helpful for the global economic recovery, especially in emerging markets.
“The global economy is at a very fragile stage,” he said. “To see higher oil prices and upward pressure on inflation, that’s the last thing we want.”
