IEA "OPEC+ Production Cuts Increase Global Energy Security Risks... Cause Economic Recession"

[Image source=Reuters Yonhap News]

The International Energy Agency (IEA) has pointed out that the large-scale production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC Plus (OPEC+) group, which includes non-OPEC oil-producing countries such as Russia, could increase risks to global energy security.

In its monthly report released on the 13th (local time), the IEA stated that due to OPEC+'s decision to significantly reduce crude oil production starting in November, oil prices are expected to rise, potentially pushing the global economy into a recession. The IEA, which includes major oil-consuming countries such as the United States, emphasized that "high oil prices could be a tipping point for the global economy, which is already on the brink of recession due to inflationary pressures and interest rate hikes."

Earlier, OPEC+ announced it would cut daily crude oil production by 2 million barrels starting next month. However, considering that many member countries are producing below their quotas, the IEA forecasted the actual reduction would be around 1 million barrels.

The IEA expects that the production cuts next month will mainly come from Saudi Arabia and the United Arab Emirates (UAE), and that Russia's production could also decrease starting in December when additional sanctions imposed by the European Union (EU) come into full effect.

The IEA noted that Russia's oil export revenue in September fell to $15.3 billion, down 17.3% from the previous month, marking the lowest level this year, which it attributed to a sharp decline in crude oil exports.

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