Oil producers must ‘take steps’ to cool surging prices, IEA boss warns
The world's major oil producers must “take the right steps” to cool the market amid a continued surge in crude prices, the International Energy Agency boss has warned.
The IEA's executive director, Fatih Birol, said: “It is now high time for all the players, especially those key producers and oil exporters, to consider the situation and take the right steps to comfort the market, otherwise I don't see anybody benefiting.
The surge in oil prices, above $85 per barrel, has put heavy pressure on emerging economies, he said.
“Expensive energy is back at a bad time for the global economy.”
Read more: Saudi oil output reaches record highs, cooling oil prices
Just hours after Birol's comments, Saudi Arabia's energy minister, Khalid al-Falih, said the country would invest $20bn in the next few years to maintain and possibly expand its spare oil production capacity.
Falih said the kingdom had not decided whether to increase its capacity – from a maximum of 12m barrels per day to 13m.
Speaking at an energy industry event in Moscow, he said: “This spare capacity is not just a natural reservoir that we have.
"This is very expensive investments for the kingdom, and some of our partners within Opec and Opec+ have elected to invest to maintain [oil capacity] to have the readiness on a short notice.
"The next 1m barrels per day of Saudi capacity is going to cost us over $20bn (£15.4bn). It costs us $2bn a year of operation expenses to staff and maintain these facilities."
Read more: Oil prices hit four-year high
Brent crude oil was trading at $85.54 per barrel this afternoon, down from a high of $86.43 earlier in the day.
Oil prices have risen in recent weeks ahead of US sanctions on Iran – set to be imposed early next month.
Saudi Arabia and Russia have increased production as a result but last month Opec and non-Opec members ruled out a further hike to compensate for the expected 2m barrel a day loss from Iran.
But the two nations have struck a private deal to raise oil output to temper soaring prices, Reuters reported.
Donald Trump has criticised Opec on several occasions this year, most recently last month, urging the oil cartel to “get prices down now”.