April 20, 2024
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OIL & GAS

OPEC Encouraged by IEA’s Emphasis on Oil Security

The Organization of the Petroleum Exporting Countries (OPEC) expressed encouragement on Wednesday regarding a commentary from the International Energy Agency (IEA), which emphasized the significance of oil security, even as the two organizations maintained differing perspectives on the outlook for oil demand.

The IEA, known for advising industrialized nations, has had past disputes with OPEC over issues such as long-term demand trends and the necessity of investing in new oil supplies.

OPEC welcomed the IEA’s acknowledgment of oil’s continued importance to the global economy.

“At OPEC, we are encouraged by this message and the reference to the continuing importance of oil to the world,” the group said.

However, disparities persist between the two entities regarding oil demand projections. While the IEA anticipates demand peaking by 2030, OPEC’s forecasts extend to 2045 without predicting a peak.

The IEA highlighted that while global reliance on oil is decreasing, it remains deeply ingrained, and disruptions in supply could lead to “significant economic harm and have a substantial negative impact on people’s lives.”

“There is a high degree of uncertainty around how quickly demand will fall, leaving oil companies facing difficult and commercially risky decisions around upstream investment,” the IEA said in a commentary by energy security analyst Ronan Graham and researcher Ilias Atigui on Monday.

Acknowledging this uncertainty, OPEC concurred with the IEA’s concerns but criticized the IEA’s stance against new investments in oil and natural gas, which it believes contributes to further market unpredictability and potential energy instability.

The IEA has advocated for increased investment in clean energy as the most effective strategy for governments to enhance energy security, diverging from OPEC’s emphasis on oil market stability and supply security.

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