Mubasher: The International Energy Agency (IEA) urged straightforwardly the Organization of Petroleum Exporting Countries (OPEC) and other key producers to ramp up production, as prices are taking a heavy toll on the global economy.

“We should all see the risky situation, the oil markets are entering the red zone,” the IEA’s executive director Fatih Birol told Bloomberg News on Tuesday.

Heated markets should be mollified “because it may be bad news for the consumers, importers today, but I believe it may well be bad news for the producers tomorrow,” Birol said.

“If there are no major moves from the key producers, the fourth quarter of this year is very, very challenging,” Birol noted.

He welcomed OPEC de-facto leader Saudi Arabia’s move to increase output, but still expected a persisting tightness in markets.

Last week, the energy watchdog warned that crude price surges would keep a lid on demand growth in some of the fastest-growing economies unless major producers take steps to add supplies.

Birol’s warning came after a 20% hike in oil prices since last August, as OPEC struggled to plug in the gap caused by waning exports from several members of the group. Adding to that, prices were pushed higher on Tuesday after hurricane Michael shut some oil fields in the Gulf of Mexico.

“Demand is still very strong and we’ve been losing oil from Venezuela in big amounts, and also Iran is going down,” Birol said.

Venezuela’s plunge could dent production below 1 million barrels per day (bpd) “very soon,” he added.

Iranian crude shipments dropped at a faster pace, with many key importers ceasing purchases before US sanctions come into effect on 4 November.

“Expensive energy is back at a bad time, when the global economy is losing momentum,” Birol said.