The International Energy Agency said, on Thursday, that the global energy crisis is expected to increase demand for oil by half a million barrels per day, which is likely to increase inflation and slow the world's recovery from the Covid-19 pandemic.
Oil and natural gas prices recently rose to multi-year highs, driving prices to record levels as widespread energy shortages persist in Asia and Europe.
"Record coal and gas prices, as well as persistent blackouts, are driving the energy sector and energy-intensive industries to switch to oil to keep operations going," the International Energy Agency said in its monthly oil report.
As a result, global oil demand is now expected to recover next year to pre-pandemic levels, the Paris-based agency added.
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The report indicated that the increase in demand in the last quarter of the year led to the largest withdrawal of stocks of petroleum products in eight years, while storage levels in OECD countries were at their lowest levels since early 2015.
Higher energy prices also add to inflationary pressures that, along with power outages, may lead to a decline in industrial activity and a slowdown in the economic recovery.
Meanwhile, the International Energy Agency estimated that the Organization of the Petroleum Exporting Countries and its allies (OPEC Plus) is scheduled to pump 700,000 barrels per day less than the estimated demand for its crude in the fourth quarter of this year, which means that demand will exceed supply at least until the end of 2021.
The International Energy Agency increased its forecast for global oil demand for this year and next by 170,000 and 210,000 barrels per day, respectively, but added that the cumulative impact of the energy crisis could reach 500,000 barrels per day from September until the first quarter of next year.
The agency warned that the group's spare production capacity would rapidly shrink from 9 million barrels per day in the first quarter of this year to only 4 million barrels per day in the second quarter of 2022.
The report stated that "the increase in spending on transitions in the field of clean energy provides the opportunity to overcome the crisis, but this must happen quickly or the global energy markets will face a bumpy road ahead."
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