Global energy crisis likely to get even worse in coming months, IEA chief says

A global energy crisis that has sparked fears of fuel shortages in Europe and abroad is likely to get even worse in the months ahead, the chief of the International Energy Agency warned at an event this week.

“The world has never witnessed such a major energy crisis in terms of its depth and complexity,” IEA Executive Director Fatih Birol said at an event in Sydney, Australia on Tuesday.

“We might not have seen the worst of it yet – this is affecting the entire world,” he added, according to Bloomberg.

Birol noted that the Russian invasion of Ukraine has exacerbated pressures on global energy markets that were already struggling to keep pace with ramped-up pandemic-era demand.

The war has disrupted fuel shipments and created fresh difficulties in Europe, where many nations are attempting to put economic pressure on Russia through sanctions despite their heavy reliance on Russian oil and gas shipments.

Fears of a spiraling energy crisis increased this week after Russia shut down a key natural gas pipeline for 10 days of maintenance. Officials in Germany and France have warned that the Kremlin could indefinitely extend the shutdown in retaliation for sanctions, leading to severe shortages in Europe.

“This winter in Europe will be very, very difficult,” Birol added. “This is a major concern, and this may have serious implications for the global economy.” 

Birol has advocated for a plan among Western allies to implement a price cap on Russia oil to limit the negative impact on the global economy – and argued the cap should also include refined products, according to Reuters.

The energy crisis has also reached the United States, where gas prices have surged to record highs this year alongside oil prices that have exceeded $100 per barrel.

The cost of gas is a key input in a June inflation reading that is expected to hit a decades-high 8.8%, according to economists surveyed by Dow Jones.

Earlier this year, Birol warned of potential fuel shortages in the US this summer that could rival the 1970s oil crisis.

“Back then it was just about oil,” Birol said in May. “Now we have an oil crisis, a gas crisis and an electricity crisis simultaneously.”