Saudi Arabia's plan to cut oil production will be risky for the global economy: Fatih Birol

Business Thursday 13/April/2023 08:36 AM
Saudi Arabia's plan to cut oil production will be risky for the global economy: Fatih Birol

Paris: The analysis of the International Energy Agency has predicted that the effect of Saudi Arabia's plan to cut oil production will be risky for the global economy and that the markets would be very tight in the second half of this year.

On Saudi Arabia's announcement of cutting oil production, Fatih Biral, Executive Director of, the International Energy Agency said, "Saudi Arabia, Russia and others - the OPEC plus producers decided to cut the oil production. And when we look at the International Energy Agency's analysis and the analysis of almost every serious institution looking at the oil markets, the second half of this year markets would be all very tight. "I found this decision risky for the global economy," he added.

Responding to a question on the impact of cut of oil production on countries like India, Biral said, "India is an energy importer country, oil importer country. The majority of the oil consumed in India is imported. Such a move could increase India's oil import bill and as such, a burden on the Indian economy and Indian consumers."

On the impact of Ukraine's war on energy, he said, "Renewable energies are energies of peace. In addition to that, we also see that as a result of this war, Russia was a major world's number one natural gas exporter. More and more countries are producing and exporting gas.And we expected in the next two, three years of time, there will be a float of LNG coming to markets and as such would put downward pressure on the prices and ease gas supply security concerns."

Giving a response if the ban on Russian oil was working, he said, "I think it depends on what the objective is. If the objective is still world gets Russian oil but the Russian revenues go down, then I think those measures reach their objective, because our numbers show that in one year of time, since February 24, when the war started, today, the Russian oil and gas export revenues declined, dropped by 60 per cent. If we consider that the oil and gas export revenues are a very important input for the Russian budget, this is a major challenge for the Russian economy."

Expressing his views on India being named as a prime country that imports crude and re-exporting refined oil to European countries, Fatih Biral said that it was a legitimate step.

"I think this is happening according to the international rules and regulations in terms of trade and financing rules. And India is doing this in a transparent way, and India is profiting having the importing of crude at a lower discounted price than the others. This is definitely a legitimate step," he said.

The Executive Director of the International Energy Agency also gave his opinion on India's Mission LiFE and said, "The Mission LiFE is, in my view, one of the most important measures that the global community can take in order to address our biggest challenge of climate change. A few weeks ago in Bangalore, I had the privilege to discuss with Prime Minister Modi on the Mission LiFE because International Energy Agency is conducting a study a big group of researchers, renowned researchers around the world, to tell the world, especially G-20 countries if the Mission LiFE is implemented by all the countries, how we can reduce the risks of climate change, how much emissions we can save and how much money we can keep in our pocket."