Saudi-led OPEC turns deaf ears on oil cuts amid global slowdown

Salim A. Essaid

Apr 29, 2023

A picture taken on April 4, 2023 shows the Nahr Bin Omar oil field and facility near Iraq's southern port city of Basra. - Major oil powers led by Saudi Arabia announced a surprise production cut of more than one million barrels per day on April 2, calling it a "precautionary" move aimed at stabilising the market. (Photo by Hussein FALEH / AFP) (Photo by HUSSEIN FALEH/AFP via Getty Images) — A picture taken on April 4, 2023 shows the Nahr Bin Omar oil field and facility near Iraq's southern port city of Basra. Major oil powers led by Saudi Arabia announced a surprise production cut of more than one million barrels per day on April 2, calling it a "precautionary" move aimed at stabilizing the market. — HUSSEIN FALEH/AFP via Getty Images

The International Energy Agency (IEA) warned the Organization of the Petroleum Exporting Countries (OPEC) and its allies on Wednesday to stop cutting oil production so that oil prices do not burden global economic growth and further drive inflation.

The Paris-based organization urged the international community to shift away from fossil fuels and transition towards renewable energy. Transitioning too quickly away from fossil fuels could itself lead to inflation, according to one London-based executive.

"We have already seen that when you just switch off fossil energy and move to a transition energy that you will have a high increase in oil prices, which leads to inflation as well," Naeem Aslam, chief investment officer at Zaye Capital Markets, told Al-Monitor.

The Gulf region is remaining defiant, however, and could fare better economically than other parts of the world in 2023.