The first session of the Rystad Talks Energy will have been unsettling for tanker owners and offshore service vessel operators, as senior personnel from the Oslo energy consultancy discussed the energy market implications of the latest covid wave.
Oil prices have eased by close to 10% over the last month but could fall sharply lower as countries respond to the omicron infection surge with new lockdown measures, said Per Magnus Nysveen, Senior Partner and Head of Analysis. Meanwhile, energy demand could well dip from an industrial downturn, putting into question OPEC+ plans to raise production by 400,000 barrel per day, due to be discussed at the energy cartel’s next meeting beginning on 4 January .
Nysveen said that politicians should stop focusing on shutting down supply. Since the energy market is driven by demand, it would make much more sense, he said, to encourage changes in consumer behaviour.
These comments fall in line with other recent observations from experts stressing the importance of energy security. It’s essential to have secure energy supplies and to be confident that the oil and gas consumed is produced as sustainably as possible, rather than from sources where climate alignment is not a priority.
Jarand Rystad followed his colleague by examining some of the omicron statistics so far. Likening the situation to ‘Snakes and Ladders’, he said we could well find ourselves right back at the beginning. Experience from the various waves so far, however, could improve reaction times and targeted lockdown measure.
The Rystad event came as the International Energy Agency (IEA) warned that the economic rebound and high gas prices have led to a surge in world coal consumption. After falling for the last two years, global power generation from coal in 2021 is likely to rise by 9%, with further increases likely in 2022. Overall coal demand is likely to have risen by 6% this year, taking it close to the records set in 2013 and 2014.
The IEA’s Executive Director, Fatih Birol, commented: “This year’s historically high level of coal power generation is a worrying sign of how far off track the world is in its efforts to put emissions into decline towards net zero. Without strong and immediate actions by governments to tackle coal emissions, in a way that is fair, affordable, and secure for those affected, we will have little chance of limiting global warming to 1.5C.”
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