Global Economy and Energy Markets Weekly Commentary – 9th Mar ‘22

In this commentary to the Gulf Intelligence, Dr Carole Nakhle, CEO of Crystol Energy, discusses the latest macroeconomic developments and their implications on energy demand.

Dr Nakhle talks about the impact US sanctions would have on Russian energy exports. Europe is much more exposed to Russia than the US especially when it comes to energy exports. Having said that, we cannot rule out the EU joining the US if there are greater political gains to be achieved. No matter how catastrophic we might think the economic consequences are going to be, we should not rule anything out and OECD economies can afford higher prices than what we are seeing today.

She further explains the reasons the EU has not yet managed to sufficiently diversify its energy needs. This has been discussed for decades and, to be fair, the EU has succeeded in reducing its reliance on Russian gas, although to different degrees between different countries. But there’s also no silver bullet that will solve the EU energy crisis.

Part of the solution is more investment in oil and gas. Until we have a technological breakthrough for energy storage to become widely and cheaply available, we cannot expect to rely on renewable and green energy. But investors aren’t going to jump into oil and gas simply because prices have spiked. Policy needs to show more commitment, and this is where we have the conflict between economic and political realities. However, it is highly likely that we see a greater push for investment in oil and gas going forward because we have come to this reality that we need it for the energy transition and climate security.

Dr Nakhle is joined by Amena Bakr, Deputy Bureau Chief & Chief OPEC Correspondent, Energy Intelligence, and Laury Haytayan, MENA Director, Natural Resource Governance Institute. Vandana Hari, Founder & CEO of Vanda Insights, moderates the discussion.