The head of the International Energy Agency warned that the global energy crisis hasn’t yet hit its peak and will likely worsen in the northern hemisphere during the winter months.
“The world has never witnessed such a major energy crisis in terms of its depth and its complexity,” IEA director Fatih Birol told an audience in Sydney. “We might not have seen the worst of it yet … this is affecting the entire world,” continued.
The global energy system is fracturing and said that many factors are contributing to the crisis, including the Russia–Ukraine conflict.
“And as a result, we see that the entire energy system is going through a crisis,” Birol said. “Oil, natural gas, coal, and electricity prices, they’re all going up of the roof,” he said, adding that Russia “is the largest exporter of oil and natural gas.”
In Europe, winter will be “very, very difficult” and may have significant implications for the global economy, he added.
The Group of Seven rich nations are considering imposing a price cap on Russian oil in an effort to keep oil flowing and curb inflation, while still limiting revenue to Moscow.
“My hope is that the proposal, which is important to minimize the effect on the economies around the world, gets buy-in from several countries,” Birol told Reuters during the Sydney Energy Forum.
“And if it is pursued, it is not only focused on crude oil, as refined products are also an important challenge for the economies and will be more of a challenge in the next months to come,” he said.
Prices of refined products, such as gasoline and diesel, have soared even more than crude oil in the wake of the loss of Russian supply, because of a global refinery capacity crunch following the closure of several plants around the world.
The Sydney Energy Forum was focused on what needs to be done to ease global dependence on China for solar technology and countries like the Democratic Republic of Congo and Russia for critical minerals essential for clean energy technologies such as batteries, electric vehicles, and wind turbines.
President Joe Biden will visit the oil-rich kingdom of Saudi Arabia this week and will likely urge OPEC oil producers to increase production. Republicans have said that Biden’s executive orders targeting the oil industry have led to a spike in gas prices, which hit $5 per gallon nationwide for the first time ever in June.
Reuters contributed to this report.