World in its "first truly global energy crisis," says IEA head

The head of the International Energy Agency said Tuesday that the world is in the midst of its “first truly global energy crisis” due to tightening liquid natural gas supply and recent oil production cuts.

LNG markets were being squeezed by the Russian invasion of Ukraine and a potential rebounding Chinese appetite for the fuel, said IEA Executive Director Faith Birhol during the Singapore International Energy Week. He added that only 20 new billion cubic meters of new LNG capacity will come to market next year, according to CNN.

Birhol also called OPEC and its allies, known as OPEC+’s, recent decision to cut oil production by 2 million barrels per day of output “risky,” as the IEA project global demand will grow by about the same amount this year.

“(It is) especially risky as several economies around the world are on the brink of a recession, if that we are talking about the global recession…I found this decision really unfortunate,” he said.

Russia, which is a member of OPEC+, is the second-largest oil exporter behind Saudi Arabia and the largest exporter of natural gas. Vladimir Putin’s decision to send troops into Ukraine upended the world energy market, especially in countries who had become reliant on its energy exports during its transition to green energy.  

For example, Germany was purchasing 50% of its coal, 55% of its gas and 35% of its oil from Russia when the war began in late February.

Moscow has used Europe’s reliance on gas to retaliate against international sanctions placed on for its Ukraine aggression.

Meanwhile, President Joe Biden relationship with Saudi Arabia’s de-facto leader, Crown Prince Mohammed bin Salman, has been shaky since his 2020 campaign, where he promised to make Saudi Arabia a “pariah state” over the assassination of journalist Jamal Kashoggi in 2018.

Saudi Arabia embarrassed the White House earlier this month by revealing U.S. officials had asked Saudi Arabia push back upcoming cuts to oil production until after the midterm elections.

National Security Council spokesman John Kirby argued the production cuts would increase Russian oil revenues and reduce the impact of sanctions.