July 13 (UPI) – The International Energy Agency warned on Tuesday that a rift between the world’s largest cartel of oil producers and its allies means oil markets – and gas prices – are likely to be volatile for the foreseeable future.
In his Oil Market Report, the IEA noted that global oil supplies, prices and demand have all increased in recent months.
Adding to the volatility, he said, last week’s decision by OPEC’s oil-producing allies, known as OPEC +, to withdraw from talks that could have boosted global production.
Until the standoff between the Organization of the Petroleum Exporting Countries and OPEC + countries is resolved, the IEA report says global oil markets will remain volatile.
“Oil prices reacted strongly to the OPEC + deadlock last week, considering the prospect of a widening supply deficit if a deal cannot be reached,” the IEA report said.
The IEA has said the standoff between OPEC and its allies creates the potential for “high fuel prices to fuel inflation and damage” already fragile economies due to COVID-19.
The agency said that no production deal is likely to mean oil markets will tighten significantly and that rising costs could accelerate the electrification of the transport sector and the energy transition.
“Oil markets are likely to remain volatile until OPEC + production policy is clear,” the IEA report said.
AAA said earlier this month that U.S. gas prices were at a seven-year high before the July 4 weekend – and noted on Monday that nationwide demand had hit a record level.
“The price of crude oil, which fluctuated last week following OPEC’s failure to come to an agreement on production increases, continues to be a dominant factor in determining how far prices will rise this summer. “, AAA mentionned in a report.
“AAA believes thatâ¦ prices have the potential to rise this week, which will only increase prices at the pump, especially in a context of robust demand.”