The International Energy Agency’s (IEA) executive director, Fatih Birol, recently expressed his uncertainty regarding global energy markets, revealing that the fate of the industry currently depends on China’s recovery from recent shutdowns, CNBC reported.
“For me, the biggest answer to the energy markets in the next months to come is [from] China,” Birol said, noting a major drop-off in the country’s oil and gas demand during its pandemic lockdowns.”
Birol described current oil markets as “balanced.” Producers, however, are awaiting a response from the Chinese market, considered the world's second largest economy and largest crude oil importer.
According to the latest oil agency market report, the energy market hopes to accelerate its operations in 2023 as the economy resumes its operations. Oil deliveries are projected to increase by 1.1 million barrels a day in its effort to reach 7.2 million barrels a day, and eventually 101.9 million barrels per day to reach global demands.
“China’s economy is rebounding now,” Birol said. “How strong this advantage will be will decide the oil and gas market dynamics. If it’s a very strong rebound, there may be a need that oil producers will increase their production.”
According to the chief, several countries, including the U.S, Brazil and Guyana have considered ramping up their output figures to fulfill global demand.
“Asked whether President Joe Biden’s Inflation Reduction Act (IRA) — with its package of funding aimed at incentivizing clean energies — could stymy production increases in the U.S., Birol said this was unlikely,” the CNBC report states.
“I think it’s beyond the government’s policies. There is huge, huge money to be made,” he said, citing record profits posted by global oil and gas companies in the past year. Birol insisted that the IRA was playing a vital role in accelerating the global clean energy transition, once again hailing it as the “single most important climate action since the Paris agreement [of] 2015.”
According to the head of IEA, the global energy crisis, driven by Russia’s invasion of Ukraine, has accelerated the transition to clean energies, adding that additional countries and regions will soon express their interest in similar clean energy investment packages.
“I’m sure, sooner or later, Europe will come with a similar energy package,” he said. “We are entering a new industrial age: The age of clean energy technology manufacturing.”