The International Energy Agency (IEA) Governing Board, warned on Thursday that rising oil prices are still affecting the global economic recovery, despite recent drops in the price, and urged oil producing countries to take action to lower the price of oil.
At its regular quarterly meeting on May 18-19, the board examined oil market developments and their impact on the global economy.
Despite a near-10 percent correction since May 5, oil prices remain at elevated levels driven by market fundamentals, geopolitical uncertainty, particularly in the Middle East, and future expectations.
The board expressed serious concern that there are growing signs that the rise in oil prices since September is affecting the economic recovery by widening global imbalances, reducing household and business income, and placing upward pressure on inflation and interest rates.
As global demand for oil increases seasonally from May to August, there is a clear, urgent need for additional supplies on a more competitive basis to be made available to refiners to prevent a further tightening of the market.
"Additional increases in prices at this stage of the economic cycle risk derailing the global economic recovery and are neither in the interest of producing nor of consuming countries. Oil importing developing countries are most likely to be seriously affected by high oil prices, undermining their economic and social well-being," the board said in a statement.
“In these circumstances, enhancing consumer-producer dialogue is urgently important to reach both short- and long-term solutions," it added.
"The Governing Board urges action from producers that will help avoid the negative global economic consequences which a further sharp market tightening could cause, and welcomes commitments to increase supply," the board said. "We stand ready to work with producers as well as non-member consumers; in this constructive spirit, we are prepared to consider using all tools that are at the disposal of IEA member countries.”