The International Energy Agency’s (IEA) Fatih Birol was in New Delhi for a number of G20 meetings. Birol, a well-known energy expert, claims that China’s economic performance would dictate how oil prices behave in an interview with TOI.
The second half of the year could see a rise in oil prices since, in my opinion, demand will be higher and non-Opec countries’ additional output will be less effective. Therefore, a deficit and pricing pressure are possible. The biggest unknown to me is how China’s economy will fare. Prices will be less strong if the second half’s performance is worse.
We and others believe that if it recovers, the supply cost alone will raise prices. In any case, output cuts at a time when the global economy is still somewhat vulnerable should not be disregarded by importing nations.
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Oil Prices depend on China’s Economy?
We might see more than 2 million barrels per day (extra demand) if China’s economy performs in line with what the Chinese government and main economic institutions say — around 5% and above. This will come from China alone to the tune of 60%, and from everyone else together, 40%. As a result, the Chinese economy will be a factor. However, this year’s demand is still strong as a result of the Covid’s recovery. Because of the exponentially rising electrification of the transportation industry, we will see a decline in the demand for oil globally over the next few years.
International oil giants won’t invest primarily in clean energy, not even in a tiny way. It originates from various locations. The revenue of worldwide oil firms was $4 trillion last year, which is twice as much as in an average year. Just 5% of that money was spent on renewable energy. But clean energy spending is increasing.
When we look at the global energy budget just this year, $1 trillion went to investments in fossil fuels and $1. 7 trillion went to investments in renewable energy. And if you consider solar, which is crucial for India, global solar investments surpassed those made in the production of oil.
For now, it seems that people will have to pay the higher Oil Prices, atleast till electric infrastructure is developed in India. There is no official confirmation for Oil prices increases till now from officials.
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