The IEA
Governing Board, at its regular quarterly meeting on 18-19 May, examined oil
market developments
and their impact on the global
economy.
Despite a near-10% correction since 5 May, oil
prices remain at elevated levels driven by market fundamentals, geopolitical
uncertainty and future expectations.
The IEA Governing 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 p
lacing
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. In these
circumstances, enhancing consumer-producer dialogue is urgently important to
reach both short- and long-term solutions.
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. 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.