World is in its ‘first truly global energy crisis’ – IEA’s Birol

SINGAPORE, Oct 25 (Reuters) – A tightening global liquefied natural gas (LNG) market and supply cuts by major oil producers have plunged the world into “the first truly global energy crisis”. ) said Tuesday.

Amid the crisis in Ukraine and a possible rebound in Chinese demand for the fuel, increased LNG imports to Europe will tighten the market, IEA executive director Fatih Birol said on the sidelines of the Singapore conference as Only 20 billion cubic meters of new LNG capacity will enter the market next year. International Energy Week.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) recently decided to cut production by 2 million barrels per day (bpd), a “risky” decision, as the IEA sees global oil production as a “risky” decision this year, Birol said. Demand growth is close to 2 million barrels per day.

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“(It’s) especially dangerous because several economies around the world are on the brink of recession, and if we’re talking about a global recession … I find this decision really unfortunate,” he said.

Soaring global prices for multiple energy sources, including oil, gas and coal, hit consumers already dealing with rising food and service inflation. High prices and the potential for rationing are potentially dangerous for European consumers heading into the northern hemisphere winter.

If the weather remains mild, Birol said, Europe could get through the winter, albeit a little battered.

He added: “Unless we’re going to have an extremely cold and long winter, unless there are any surprises in what we’re seeing, such as the North Stream pipeline explosion, Europe should experience some economic and social setbacks this winter.”

For oil, consumption is expected to grow by 1.7 million bpd in 2023, so the world still needs Russian oil to meet demand, Birol said.

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G7 nations have proposed a mechanism that would allow emerging nations to buy Russian oil at lower prices to limit Moscow’s income after the Ukraine war.

Birol said there were still many details to be worked out on the plan, which would require support from major oil importers.

It is not unreasonable to believe that as much as 80% to 90% of Russian oil will continue to flow outside the price cap mechanism if Moscow tries to flout it, a U.S. Treasury Department official told Reuters last week.

“I think that’s good because the world still needs Russian oil to flow into the market at the moment. 80%-90% is a good and encouraging level to meet demand,” Birol said.

He added that while there are still large strategic oil reserves available to tap during the supply disruption, another release has yet to be brought up.

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Energy security drives renewable energy growth

Birol said the energy crisis could be a turning point in accelerating clean energy and creating a sustainable and secure energy system.

“Energy security is the number one driver (of the energy transition),” Birol said, as countries see energy technology and renewable energy as a solution.

The IEA has raised its 2022 forecast for growth in renewable energy capacity to 20% from 8% previously, adding nearly 400 gigawatts of renewable energy capacity this year.

Birol said many countries in Europe and elsewhere are accelerating the installation of renewables by reducing the permitting and permitting process for alternative Russian gas.

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Reporting by Florence Tan, Muyu Xu and Emily Chow; Editing by Jacqueline Wong and Christian Schmollinger

Our Standard: The Thomson Reuters Trust Principles.

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