World still needs Russian oil to flow even with price cap: IEA

"The world is experiencing the first truly global energy crisis"
World still needs Russian oil to flow even with price cap: IEA
Fatih Birol, head of IEA (Image credit: SIEW)

The International Energy Agency’s (IEA) Fatih Birol stressed that the world still needs Russian oil to flow into the market despite a price cap of between 80 and 90 percent being an “encouraging level” to meet demand.

Many details about setting a price cap for Russian oil remain to be worked out, Birol said at a conference today at the Singapore International Energy Week (SIEW).

He stated that the tightening of liquefied natural gas (LNG) markets around the world, combined with major oil producers cutting supplies, has resulted in the world experiencing “the first truly global energy crisis.”

In addition, Birol noted that the increased imports of LNG into Europe as a result of the Ukraine crisis, as well as a possible recovery in China’s demand for fuel, will exacerbate the market’s scarcity, which will receive only 20 billion cubic meters next year.

Meanwhile, IEA’s head stressed that the recent decision by the Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC +, to cut two million barrels per day (BPD) is a “risky” decision, as the IEA forecasts an increase in oil demand of close to two million barrels per day this year.

“The IEA expects to increase renewable energy by nearly 400 gigatonnes in 2022, a 20 percent increase from last year,” he said.

“(It is) especially risky as several economies around the world are on the brink of a recession, if that we are talking about the global recession…I found this decision really unfortunate,” he said.

However, Birol also said the current energy crisis could be a turning point in the history of energy for accelerating clean energy sources and for forming a sustainable and secured energy system.

“Energy security is the number one driver (of the energy transition),” he noted, as countries see energy technologies and renewables as a solution.

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