IEA warns: the world is in a "real" energy crisis for the first time, the world needs Russian oil

On Tuesday, Fatih Birol, director general of the International Energy Agency (IEA), said the world has fallen into "the first real global energy crisis" as the global LNG market tightens and major oil producers cut supplies.

Birol warned that the global gas market will remain tight next year. He also mentioned that with G7 countries preparing to set price caps on Russian oil, the world still needs the vast majority of Russian oil to flow into the market to ensure global demand is met.

Natural gas market to remain tight

Speaking at the International Energy Week event in Singapore, Birol said that the increase in European LNG imports during the Russia-Ukraine crisis and a possible rebound in Chinese demand for the fuel will further tighten the energy market.

The IEA has recently predicted that while European gas demand has recently declined due to high prices and energy efficiency measures, the global gas market will remain tight next year due to reduced pipeline gas supplies. Only 20 billion cubic meters of new LNG capacity is expected to enter the market next year, Birol added at Tuesday's event.

Global energy demand is expected to pick up amid reduced supply. According to the International Energy Agency, global natural gas consumption has fallen 0.8 percent year-on-year so far this year due to a contraction in European gas consumption. However, the IEA expects global gas consumption to rise slightly by 0.4% next year.

The IEA also previously warned that the EU will have less than 20% of its gas stocks next February if LNG supplies are strong, and that EU gas stocks could be as low as 5% next February if LNG supplies are further reduced.

Possible acceleration of clean energy transition

Birol also commented that the recent decision by the Organization of the Petroleum Exporting Countries and its ally OPEC+ to cut production by 2 million barrels per day was a "risky" decision, as the IEA expects global oil demand to grow by nearly 2 million barrels this year.

With several of the world's economies on the brink of recession... (this) is particularly risky," he said. I think the decision is really unfortunate."