Due to tightening liquified gas (LNG) markets and cuts to oil production, the world is in the midst of its ‘first truly global energy crisis,’ according to the head of the International Energy Agency (IEA).
Speaking at the Singapore International Energy Week, IEA executive director Dr Fatih Birol said that an increase in imported LNG to Europe due to the war in Ukraine, alongside potentially renewed interest by China in the fuel, will drive tightening in the market.
According to Birol, only 20bn cubic meters of new capacity will be available on the market next year, a very small figure considering US daily consumption is set to average 26.8bn cubic meters in 2022.
A decision by the Organisation of the Petroleum Exporting Countries (OPEC+) to cut oil production by 2mln barrels per day was also described as “especially risky” by Birol, considering “several economies around the world are on the brink of a recession”.
Cuts in oil production are set to further the crisis, including by adding to increasing energy bills.
Birol showed optimism though, saying Europe should emerge from this winter with only “economic and social bruises,” so long as there are no more surprises, “for example the Nordstream pipeline explosion”.
He also discussed how the current energy crisis is driving investment in renewable energy, as nations seek to end reliance on others for supply, outlining his belief that the current crisis could be seen as the key turning point in the development of a sustainable and secure global energy system.