The unprecedented global energy crisis that threatens the world economy is likely to worsen in the coming months, according to the head of the International Energy Agency.
Speaking at a world energy forum in Sydney on Tuesday, Fatih Birol said: “The world has never witnessed an energy crisis of such depth and complexity.”
“We may not have seen the worst yet – it affects the whole world,” he added.
Soaring energy prices have rocked economies around the world after Russia’s invasion of Ukraine triggered a series of Western sanctions on the country’s oil and gas supplies, ultimately leading to severe constraints supply. Demand that had been contained during the pandemic exploded in 2020 and 2021, and more normal activity took place.
In the United States, rising energy costs have contributed to high levels of inflation that are hitting every corner of the economy and hurting Americans at the pumps in particular.
With the European winter just months away, Birol said the region will face big challenges as Russia has rattled energy markets even more in recent days. It has cut natural gas supplies to parts of Europe to carry out maintenance on the Nord Stream 1 gas pipeline, but concerns are growing that the shutdown could become permanent.
“This winter in Europe will be very, very difficult,” Birol said. “This is a major concern, and it can have serious implications for the global economy,” he continued.
This has forced European countries like Germany and Italy to switch to coal as a contingency plan and even to consider rationing, in case Russia turns off the gas tap to the region.