Oil demand is set to increase more than previously thought in 2022 according to the International Energy Agency, as it called out Middle Eastern countries for not meeting output targets.
In its latest monthly report, the Paris-based organization raised its demand outlook by 3.2 million barrels per day, anticipating that 100.6 million bpd would now be needed.
The Organization of the Petroleum Exporting Countries revealed on Thursday that its 13 members had increased production by just 64,000 bpd between December and January to reach almost 28 million barrels per day.
The IEA believes that countries in OPEC and their 10 allies, including Russia, known as OPEC+, could be doing more to meet production targets.
Analysts have argued that some members, such as Angola and Nigeria, have been unable to scale up their production and others, such as Saudi Arabia and the UAE, are unwilling to do so
“If the persistent gap between OPEC+ output and its target levels continues, supply tensions will rise, increasing the likelihood of more volatility and upward pressure on prices,” the IEA said.
“But these risks, which have broad economic implications, could be reduced if producers in the Middle East with spare capacity were to compensate for those running out,” the report added.
OPEC+ began to increase output last year, renewing every month a target of 400,000 barrels per day, as demand and prices recovered after countries began to lift Covid restrictions.
OPEC+ agreed on a similar increase again earlier this month despite soaring crude prices and geopolitical tensions rattling the markets.
“Chronic underperformance by OPEC+ in meeting its output targets and rising geopolitical tensions have propelled oil prices higher,” the IEA said in its monthly oil market report.
Prices of the benchmark US and international contracts hit seven-year highs in January and have hovered around $90 per barrel.
The IEA has 30 members — mostly Western countries — and it advises governments on energy policy. Saudi Arabia and Russia are not members.