As coal and oil prices continue to rise rapidly, fears of an energy crisis are growing. These fuels provide the world’s electricity, heat and transportation.
Industry expects energy prices to increase, and further inflation will result from rising shipping costs and other commodity costs.
West Texas Intermediate (WTI) futures reached $77.62 per barrel, up 60.45 percent from the beginning of the year. It is the highest price in seven years.
Unlike coal, oil prices have a bigger supply problem. OPEC+, a consultative body on oil prices involving 11 oil-producing countries, including the Organization of the Petroleum Exporting Countries (OPEC), decided to maintain the July agreement during a video conference on the 4th. Member countries agreed to keep production by an average of 400,000 barrels per day. The United States has argued that OPEC+ should increase production. “Energy demand has risen and economic gridlock has gradually lifted”.
Norwegian energy consultant Bjornard Tonhaugen warned that if OPEC+ fails to address excessive oil price spikes, the global economic growth may suffer.
Oilprice.com, a specialized oil media, recently found that OPEC+ does not have the capacity to increase its production. The report indicated that it is mainly due to insufficient investments in production and storage facilities, despite international pressure. The media reported that major international organizations and financial institutions are actively reducing oil investments due to environmental concerns. Despite increases in oil exports in Saudi Arabia and the UAE, other OPEC+ member countries are experiencing declines.
Oil prices are expected to rise for some time to come.
Particularly in Europe, which is pursuing a green transition, demand for natural gas for heating and electricity generation is rising sharply ahead of winter, causing oil prices to rise. On the New York Mercantile Exchange on the 4th, natural gas futures were trading at $5.77 per million Btu, double the $2.62 of a year ago.