The executive director of the International Energy Agency on Monday in an interview with CNBC spoke about the intricacies of the energy transition and competing challenges that will need to be balanced in the coming years.
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The executive director of the International Energy Agency on Monday spoke about the current challenges facing global oil markets, stressing the significant impact on China’s demand over the next few months.
In an interview with CNBC at the World Economic Forum in Davos (Switzerland), Fatih Birol painted a vivid picture of the current situation, describing oil prices as “very high.”
“They are risky for economic recovery around the world, but especially in importing countries in the developing world,” he said. “It’s a big risk, along with the fact that food prices are very, very high, and I think it could cause us, the world … step by step to recession.”
Due to growing geopolitical tensions after Russia’s invasion of Ukraine and continuing concerns about supplies that cast a shadow over oil markets, the price of Brent oil is now about $ 113 a barrel.
Looking ahead, Birol outlined some of the challenges that markets may face in the coming months.
“I really hope the increase will be off [the] The United States from Brazil, Canada this year, [will] will be accompanied by growth from key producers in the Middle East and elsewhere, ”he said.
“Otherwise, we have only one hope that we will not have big problems in the oil markets in the summer, which hopes that China’s demand remains very weak.”
In recent months, demand for oil in China weakened as the country imposed a series of tough blockades in an attempt to curb the spread of Covid-19.
If China returns to the usual trends of oil consumption and demand for oil, “then we will have a very difficult summer around the world,” said Birol.
During an interview with CNBC, Birol was also asked about the “huge” profits that many hydrocarbon companies, as well as search companies, receive and what to do with them.
His response illustrated the subtleties of the global energy transition and competing challenges that will need to be balanced in the coming years.
“On average over the last five years [the] the oil and gas industry earned revenue [of] about $ 1.5 trillion, ”he said.
“And this year from 1.5 to 4 trillion US dollars, which will more than double the revenues of oil and gas companies.”
He added that not only companies made money by checking names in countries such as Saudi Arabia, Iraq, Iran, Russia, Angola and Nigeria.
“Of course, the money should go, in my opinion, to replace Russian oil and gas in terms of traditional assets,” Birol said.
“But I really hope that the money also goes to clean energy, clean and safe energy technologies, ranging from solar energy, wind, capture and storage of carbon, hydrogen.”
“We [responding to] … this is an immediate crisis, ”Birol said. “But our reaction should not confine our energy infrastructure to a horrible world that is much, much hotter than it is today, and with a lot of problems – extreme weather events and so on.”