Oil producers need to open the taps and increase supply to protect the global economic recovery, the International Energy Agency (IEA) said in a rare formal statement yesterday.
The Paris-based body, which speaks for the big oil consumers in the West, issued the warning ahead of next month's meeting of the Organisation of Petroleum Exporting Countries (Opec). Senior IEA officials, including its executive director Nobuo Tanaka and chief economist Fatih Birol have made similar warnings in the past – but yesterday's intervention by the governing board marked a departure from the IEA's usual stance of not commenting on policies adopted by the big oil producers.
"Despite a near-10 per cent correction since 5 May, oil prices remain at elevated levels driven by market fundamentals, geopolitical uncertainty and future expectations," the statement said. "There are growing signs that the rise in oil prices since September is affecting the economic recovery by widening global imbalances, reducing household and business income and placing upward pressure on inflation and interest rates."
It went on to say that the governing board "urges action from producers that will help avoid the negative global economic consequences which a further sharp market tightening could cause, and welcomes commitments to increase supply".
The call came as Brent crude for July delivery continued to hover above $112 (£69) per barrel, which is up by about 50 per cent since the beginning of September. Despite the correction this month, prices have climbed by more than 20 per cent since the start of the year, driven up in part by the geopolitical turmoil in the oil-rich Middle East and North Africa.