Oil markets will face ‘serious problems’ as demand from China and India ramps up, IEF secretary general says

Oil
prices
are
set
to
rise
in
the
second
half
of
the
year
as
supply
struggles
to
meet
demand,
according
to
the
Secretary
General
of
the
International
Energy
Forum. 

Oil
demand
bounced
back
to
pre-Covid
levels
quickly,
“but
supply
is
having
a
tougher
time
in
catching
up,”
said
Joseph
McMonigle,
secretary
general
of
the
International
Energy
Forum,
adding
that
the
only
factor
moderating
prices
right
now
is
the
fear
of
a
looming
recession. 

“So,
for
the
second
half
of
this
year,
we’re
going
to
have
serious
problems
with
supply
keeping
up,
and
as
a
result,
you’re
going
to
see
prices
respond
to
that,”
McMonigle
told
CNBC
on
the
sidelines
of
a
meeting
of
energy
ministers
from
the
group
of
the
20
leading
industrial
economies
(G20)
in
Goa,
India,
on
Saturday. 

McMonigle
attributes
the
push
in
oil
prices
to
increasing
demand
from
China
—
the
world’s
largest
importer
of
crude
oil
—
and
India. 

“India
and
China
combined
will
make
up
2
million
barrels
a
day
of
demand
pick-up
in
the
second
half
of
this
year,”
the
Secretary
General
said. 

Asked
if
oil
prices
could
once
again
spike
to
$100
a
barrel,
he
noted
that
prices
are
already
at
$80
per
barrel
and
could
potentially
go
higher
from
here. 

“We’re
going
to
see
much
more
steep
decreases
in
inventory,
which
will
be
a
signal
to
the
market
that
demand
is
definitely
picking
up.
So
you’re
going
to
see
prices
respond
to
that,”
McMonigle
said. 

However,
McMonigle
is
confident
that
the
Organization
of
the
Petroleum
Exporting
Countries
and
its
allies
—
collectively
known
as
OPEC+
—
will
take
action
and
increase
supply,
if
the
world
eventually
succumbs
to
a
“big
supply-demand
imbalance.”

“They’re
being
very
careful
on
demand.
They
want
to
see
evidence
that
demand
is
picking
up,
and
will
be
responsive
to
changes
in
the
market.” 

 Brent
crude
futures
with
September
expiry
last
settled
at
$81.07
per
barrel
on
the
Friday
close,
while

West
Texas
Intermediate
crude
with
September
delivery
ended
the
trading
day
at
$76.83. 

McMonigle
also
spoke
about
the
liquified
natural
gas
market,
crediting
the
stability
in
Europe’s
energy
market
to
a
warmer-than-expected
winter
in
2022. 

“The
weather
was
probably
the
luckiest
thing
to
have
happened,”
he
said,
but
warned
that
“it’s
not
just
this
winter,
[but]
the
next
couple
of
winters”
that
could
be
rocky.

Global
policymakers
cannot
turn
complacent
just
because
LNG
prices
have
fallen,
and
more
investment
in
renewable
energy
is
needed
to
ensure
the
lights
continue
to
stay
on,
he
said.

Once
“whispered”
about,
energy
security
has
now
become
the
main
focus
of
summits
such
as
the
G20,
McMonigle
signaled.

“We
definitely
have
to
keep
pursuing
the
energy
transition,
and
all
options
have
to
be
on
the
table,”
he
highlighted,
adding
that
prices
and
volatility
in
the
energy
markets
has
to
be
closely
watched. 

“I’m
worried
that
if
the
public
starts
to
connect
high
prices
and
volatility
in
energy
markets
to
climate
policies
or
the
energy
transition,
we’re
going
to
lose
public
support,”
he
said. 

“We’re
going
to
be
asking
the
public
to
do
a
lot
of
difficult
and
challenging
things
in
order
to
enable
the
energy
transition.
We
need
to
keep
them
on
board.”