IEA: The World is in the Midst of the First Real Global Energy Crisis

“The world has never witnessed an energy crisis of such depth and complexity”, said the head of the International Energy Agency, Fatih Birol, on Tuesday, stressing that "we are in the midst of the first real global energy crisis", reports Reuters.

Speaking at the ongoing Singapore International Energy Week, Birol said tightening global liquefied natural gas (LNG) markets and major oil producers cutting supply had put the world in the middle of "the first real global energy crisis".

Rising global prices for a range of energy sources, including oil, natural gas and coal, are hurting consumers at the same time they already have to deal with rising food and service inflation. High prices and the possibility of an energy regime are potentially dangerous for European consumers as they prepare to enter the Northern Hemisphere winter.

Europe could make it through this winter, albeit a little more "battered" if the weather stays mild, Birol said.

"Unless we have an extremely cold and long winter, unless there are surprises in terms of what we've seen, like the Nord Stream pipeline explosion, Europe should go through this winter with some economic and social bruises," he added.

“Rising LNG imports into Europe amid the Ukraine crisis and a potential resurgence in Chinese appetite for liquefied petroleum gas will tighten the gas market, with only 20 billion cubic meters of new LNG capacity coming on stream next year”, said the executive director of the IEA.

At the same time, the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as "OPEC+", to cut joint production by 2 million barrels per day is a "risky" decision as the IEA sees a global increase in demand of oil of nearly 2 million barrels per day this year.

According to them, the energy crisis can be a turning point for the acceleration of clean energy sources and for the formation of a sustainable and secure energy system.

"Energy security is the number one driver of the energy transition," with countries seeing energy technology and renewable energy sources as a solution to the problem, Birol said.

The IEA revised up its forecast for growth in renewable energy capacity additions in 2022 to a 20% year-on-year increase from 8% previously, with nearly 400 gigawatts of renewable energy capacity added this year.

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