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"The relentless deterioration of the economy and higher prices
sparked by an OPEC+ plan to cut supply are slowing world oil
demand," the Paris-based agency, which includes the United
States and other top consumer countries, said.
"With unrelenting inflationary pressures and interest rate hikes
taking their toll, higher oil prices may prove the tipping point
for a global economy already on the brink of recession," it
added in its monthly oil report.
The warning from the agency highlights a rift with Saudi Arabia,
the world's top oil exporter and OPEC's de facto leader.
U.S. President Joe Biden vowed unspecified "consequences" for
relations with Saudi Arabia after the OPEC+ move, but Riyadh
rejected criticism and said the move was not political and aimed
at balancing the market and curbing volatility.
Actual supply losses will likely be around 1 million barrels per
day and not the 2 million barrels announced by the OPEC+ bloc,
which unites the producer club and allies like Russia, the IEA
said.
Capacity constraints plaguing output in other OPEC members mean
Saudi Arabia and the United Arab Emirates will deliver most of
the reductions, the IEA said, while new G7 and European Union
sanctions on Russia could further tighten global supply.
The EU this month endorsed a plan by the G7 club of wealthy
nations to impose a cap on prices for Russian oil exports, a
complex set of new global sanctions aimed at depriving Moscow of
revenue for its invasion of Ukraine.
Any big disruption to Russian oil flows even to non-EU and
non-G7 buyers could raise prices worldwide, however, and heap
economic pain on citizens of the sanctioning countries already
grappling with high inflation and costs of living.
(Reporting By Noah Browning. Editing by Jane Merriman, Jan
Harvey and David Evans)
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