an oil supply cut from the organization of the petroleum exporting countries threatens to deepen a global energy crisis by sending oil prices higher at a time of already elevated inflation and weak economic growth the international energy agency said last weeks two million barreladay reduction in the groups output targets which incurred sharp criticism from the us and its partners will tighten the oil market further at a moment of extreme vulnerability with few additional sources of supply available to compensate the parisbased agency said thursday the cuts impact will be to exacerbate a mix of high oil prices and weakening global growth both of which would undermine longerterm demand for oil the iea said as it slashed its oildemand forecasts with unrelenting inflationary pressures and interest rate hikes taking their toll higher oil prices may prove the tipping point for a global economy already on the brink of recession the iea said in its monthly market report the iea cut its oildemand growth forecasts by 470000 barrels a day for 2023 to 17 million barrels a day it also lowered its 2022 oildemand growth forecast by 60000 barrels a day to 19 million barrels a day oil demand growth has steadily fallen throughout the year and is forecast to contract in the fourth quarter by 340000 barrels a day the iea said opec has said higher oil prices are necessary to spur fresh investments in oil production but the iea said constraints among oil producers meant additional supplies would be scant us shale oil producers facing higher costs are withholding investment while most western nations are consciously moving away from fossil fuels opecs own members are struggling with a lack of spare capacity the cut has undone a trend of steadily recovering oil supply following the covid19 pandemic with the resulting higher price levels exacerbating market volatility and heightening energy security concerns the iea said the ieas report characterizes the supply cut as a loselose situation for both oil producers and consumers as buyers of oil suffer from higher prices in the short term while oil producers stand to see weaker demand as a result the cut also comes ahead of an eu embargo on russian oil and a plan by the group of seven wealthy nations to cap oil prices both of which analysts warn could further undermine global energy supplies russia has said it would cut production and withhold supplies from nations participating in the price cap mechanism meanwhile time was running out for eu states to find alternative sources of energy to compensate for the stillhigh levels of oil currently imported from russia the iea said russias oil exports to the eu fell by 390000 barrels a day in september to 26 million barrels a day the iea said the eu has just two months until the embargo on russian crude imports comes into force but still needs to find an alternative source for 13 million barrels a day of russian oil it warned opec has said its production cut is aimed at stabilizing oil markets and countering declining oildemand growth on wednesday in its own report the group sharply slashed its forecasts for global economic growth and oil demand for 2022 the iea now expects total oil demand of 996 million barrels a day and 1013 million barrels a day in 2023 the agency cuts its forecast for global oil supply next year by 12 million barrels a day to 1006 million barrels a day and by 200000 barrels a day to 999 million barrels a day for 2022 write to will horner at williamhornerwsjcom