Rising global prices in many energy sources, including oil, natural gas and coal, are affecting consumers, as well as those already dealing with rising food and services inflation.
Rising global prices in many energy sources, including oil, natural gas and coal, are affecting consumers, as well as those already dealing with rising food and services inflation.
Tight markets for liquefied natural gas (LNG) around the world and major oil producers cut supplies to put the world in the midst of the “first truly global energy crisis”, the head of the International Energy Agency (IEA) said on Tuesday. Have given.
IEA Executive Director Fatih Birol said during Singapore that rising LNG imports to Europe amid the Ukraine crisis and a possible rebound in Chinese appetite for the fuel will strengthen the market as only 20 billion cubic meters of new LNG capacity will hit the market next year. . International Energy Week.
At the same time the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to cut production by 2 million barrels per day (bpd) is a “risky” decision as the IEA Global Oil sees demand growth of around 2 million bpd this year, Birol said.
“(It) is particularly risky because many economies around the world are on the verge of recession, if we are talking about a global recession … I found this decision really unfortunate,” he said.
Rising global prices in many energy sources, including oil, natural gas and coal, are affecting consumers as well as those already dealing with rising food and services inflation. High prices and rationing are potentially alarming for European consumers as they prepare to enter the Northern Hemisphere winter.
Europe could make it through this winter, although somewhat battered, if the weather remains mild, Birol said.
“While we don’t have an extreme cold and a long winter, there will be no surprises in terms of what we’ve seen, for example the Nordstream pipeline explosion, with Europe going through some of the economic and social injuries from this winter,” he said. should.”
As for oil, consumption is expected to grow by 1.7 million bpd in 2023, so the world will still need Russian oil to meet demand, Mr Birol said.
The G7 nations have proposed a mechanism that would allow emerging countries to buy Russian oil but at lower prices to reduce Moscow’s revenue in the wake of the Ukraine war.
Mr Birol said the plan still had many details and would require purchases from major oil importing countries.
A US Treasury official told Reuters last week that it is not unreasonable to believe that 80% to 90% of Russian oil prices will continue to flow outside the cap mechanism if Moscow wants to stop it.
“I think it’s good because the world still needs Russian oil to get into the market. 80%-90% is a good and encouraging level to meet demand,” Birol said.
He added that although there is still a significant amount of strategic oil reserves that could be tapped during the supply disruption, another release is currently not on the agenda.
Energy security leads to the development of renewable energy
The energy crisis could be a turning point in accelerating clean sources and creating a sustainable and safe energy system, Mr Birol said.
“Energy security (of the energy transition) is the number one driver,” Mr Birol said, as countries look to energy technologies and renewable energy as a solution.
The IEA has revised its forecast for renewable energy capacity growth in 2022 to 8% on a 20 percent year-on-year basis, with about 400 gigawatts of renewable capacity being added this year.
Many countries in Europe and elsewhere are accelerating the installation of renewable capacity by cutting down on permitting and licensing processes to replace Russian gas, Mr Birol said.