The current oil crisis is not what it used to be – and consumers will have to bear the brunt of rising inflation, Angela Wilkinson of the World Energy Council told CNBC.
“I think it’s a first global power shock, it’s not like the crisis of the 1970s, not the oil shock crisis. It’s a … consumer-driven crisis and the consumer-driven combination that’s going to come out of it. It has to be very significant.” Wilkinson, the agency’s secretary general, told CNBC’s “Capital Connections” on Thursday.
Oil prices rose after Russia, a major oil producer, invaded Ukraine in late February, disrupting major global supply chains in the energy sector as Western nations imposed heavy sanctions on Moscow over its unpleasant war.
The European Union has also proposed a series of sanctions on Russian oil, putting further pressure on energy prices.
In Asia, international benchmark Brent crude futures have risen more than 42% since the beginning of the year, as of Friday morning. It last traded at around 1 111 per barrel, much higher than the level below $ 80 earlier this year.
The world saw several oil shocks in the 1970s As a result of the collision In the Middle East.
In 1973, Middle Eastern oil producers cut off supplies from the United States and other Western nations after helping Israel during the Arab-Israeli war that year. The Iran Revolution of 1978-1979, which toppled the Shah of Iran, also triggered another power struggle.
“If you look at the prices of those refined products in many parts of the world, they are now unsuitable for many in the lower half of society,” Wilkinson warned. “We need to see huge redistribution of some size … money coming out of this crisis. Consumers are really, really hurt.”
Inflation in the UK hit a 40-year high in April due to rising energy prices, according to official data this week. A similar spike in prices was also seen in the United States, where consumer inflation was close to a 40-year high in April.
“Just six months ago, we were just talking about climate security. A year ago, we were talking about the Covid crisis and recovery,” Wilkinson said. “Now we have this rolling series of energy crises – covid, climate, conflict. And now, in many countries, our livelihoods are in crisis.”
“The biggest challenge is this new context of purchasing power and energy justice.” “This is a big uncertainty and will require policy innovation, but it will also require a new approach to international cooperation.”
– CNBC’s Patty Dom contributed to this report.