Rising oil prices could slow recovery, IEA warns

Rising oil prices could slow the global recovery unless major producers can strike a deal to increase production, the International Energy Agency said.

Global oil demand "surged" by 3.2 million barrels a day in June to 96.8 million barrels a day, the IEA said. The figure was about 3% less than pre-pandemic levels.

The Opec+ group of leading producers failed to reach a deal on increasing production last week when the United Arab Emirates objected to a deal that did not revise the calculation of its target. Oil rose to more than $75 a barrel, its highest price since 2018, in response.

"The Opec+ stalemate means that until a compromise can be reached production quotas will remain at July's levels," the IEA said. "In that case, oil markets will tighten significantly as demand rebounds from last year's Covid-induced plunge.

The IEA said that scenario could "put a drag on the economic recovery, particularly in emerging and developing economies". By 2022 demand is expected to average 99.5 million barrels a day, restoring consumption to near pre-pandemic levels boosted by vaccinations and reopening developed economies.