The surprising announcement of OPEC+ to implement voluntary production cuts of 1.66 million barrels per day from May until the end of the year could cause tightness in the second half of this year, according to Fatih Birol, Executive Director of the International Energy Agency (IEA), Reuters reported.
This, Birol added, would push oil prices higher.
After OPEC+’s announced, oil prices have increased above $80 since the beginning of the month, International benchmark Brent futures traded at about $87 a barrel on Wednesday, and U.S. crude futures traded at about $83 a barrel.
Last year’s Russian invasion to Ukraine, prompting sanctions on Russian energy that forced countries to look elsewhere for barrels have restructured global markets.
A milder winter in 2022 helped Europe avoid the danger of declining Russian supplies, but the winter to come is expected to be challenging for the region in terms of energy supplies, Birol said at the Columbia Global Energy Summit in New York.
Birol added that Europe should be able to do without Russian liquefied natural gas.