Oil prices may increase if OPEC fails to bolster production and inventories decline, the head of the International Energy Agency said.
Supplies may become “very tight” if the Organization of Petroleum Exporting Countries doesn’t increase production to meet higher demand in July, Executive Director Nobuo Tanaka said today in an interview with Bloomberg Television in St. Petersburg, Russia. Saudi Arabia is likely to deliver on its pledge to keep markets adequately supplied, he said.
Brent crude futures have advanced 20 percent this year, trading today at $113 a barrel in London, as world consumption increases and conflict halts exports from Libya, holder of Africa’s largest reserves.
If prices remain at $110 to $120 for the rest of the year, the “burden on the global economy would be as bad as 2008, when the economy made a hard landing,” Tanaka said. The agency is prepared to coordinate a release of emergency stockpiles if the gap between supply and demand remains, he said.