International Energy Agency Executive Director Fatih Birol said the global energy crisis is the first-of-its-kind and is unlikely to end soon, and prices will rise further.
Russia was the biggest energy exporter in the world and the loss of Russian energy from global markets is not easily replaceable, Birol told BQ Prime’s Menaka Doshi on the sidelines of the World Economic Forum in Davos on Wednesday.
The soaring global energy prices are only likely to rise in the summer as additional production from the U.S., Canada and Brazil will not reach the market till the end of the year, according to Birol. The uptrend, he said, may moderate slightly if Chinese economic weakness continues, affecting its energy demand.
Birol decried the weaponisation of energy. “As a result of what has just happened, I expect there will be a reorientation of the international energy trade. Russia has proved once again not to be a reliable energy partner–this time for Europe, and tomorrow can be for another country,” he said. “The international trade will suffer as a result of the actions of Russia.”
Birol expressed surprise at OPEC’s refusal to increase oil supplies despite surging energy prices. Endorsing Indian Petroleum Minister Hardeep Singh Puri’s exhortation to the cartel, Birol said natural gas and food prices may also soar in the near future, leading to a global recession.
Puri had said at the WEF on Tuesday that global crude oil prices hitting $110 a barrel were unsustainable. There was no global energy shortage–rather, the quantities of energy released into the market were falling far short of demand, he had said.
The crisis will also impact transition towards clean energy, according to Birol.
The push towards renewable energy will continue in the coming years in some countries such as India, but on a global case, the shift towards may be hit as governments refocus on oil and gas, Birol said. But countries should not lose sight of their commitments towards climate change control in pursuit of the traditional energy market, he said.