Arab Steel Summit

Energy sector…Have we passed the worst?

Abdurrahman Al Numari

The stability of energy markets, their sustainability, and the safety of their arteries are the eye of development, the basis of growth and the beating heart of civilization. In no way can countries and societies, facing scarcity in energy or supply disruptions be stable.

In the last decade, the world witnessed many changes and influential events and faced many serious challenges, which naturally affected its vital joints in various economic, social, security and other aspects.

Corona pandemic, which paralyzed the global economy and severely affected most economic activities and energy markets in general, oil markets in particular, were not isolated from the effects of this severe pandemic, as the demand for oil and its derivatives decreased in a record way due to the total or partial embargo imposed by several countries.

The closure of many economic activities and travel restrictions led to a decrease in the demand for oil and its derivatives, including aviation fuel, and other factors that plunged oil prices to historical levels and recorded unprecedented prices.

This pandemic, which the world thought had dusted off and passed, followed the Russian-Ukrainian crisis, which undoubtedly threatened global energy security, and its impact even exceeded food security.

When anticipating the future of energy in the short term, and I mean here “2023”, I believe that predicting it accurately will not be easy because the inputs are changing, volatile and accelerating, requiring dynamic and accelerated work as well, so the outputs become more accurate in anticipating the future or reading it objectively.

Concerning the inputs for looking forward to the future in the short term, Russia cannot be overlooked in any way because it is one of the most important oil and gas producers in the world, and the impact of economic sanctions against Russia on global energy supplies and prices in general, and on Europe in particular.

Among the necessary inputs also – in my opinion – is the persistent, surprising and subjective endeavour of some countries and entities to stop investments in new exploration and drilling for oil, which will cause – in my belief – a deepening of the energy crisis and even the spread of an energy scarcity epidemic that will affect many countries. Moreover, their woes will suffer if those who bear this banner do not review their orientation with wisdom far from the temporary political and economic agendas.

I really see that if the Russia-Ukraine crisis and the escalation between Russia on the one hand and Ukraine and the West on the other continue, therefore, no breakthrough occurs. Moreover, if some decision-makers continue to legislate and implement their radical approaches against oil and investment in it, thus, the world stands on the brink of an abyss regarding energy security.

I believe that the features of the energy crisis have begun to become evident in some European countries that are working hard to ease the severity of economic sanctions on Russia that include energy supplies, as these countries are aware that they cannot, in any way, dispense with Russian energy products in the short term in the least. It is known that the alternatives are costly compared to the Russian energy arteries and that American gas will burden the European economy, whether they like it or not.

Despite the difficulty and complexities of the situation, I see a glimmer of hope for an imminent breakthrough or concessions from both sides; albeit partial that sends a message of reassurance to the global energy markets and that, the worst is over!