The International Energy Agency (IEA) is discussing with governments and industry whether to develop an LPG security mechanism as global prices for the fuel average 60% above prewar levels, the head of the global energy watchdog Fatih Birol said.
Speaking at Liquid Gas Week, organized by the World Liquid Gas Association at the Istanbul Congress Center, Birol said the energy crisis had disrupted LPG markets, with more than a third of global trade in the fuel passing through the Strait of Hormuz, mainly to Asia.
Global LPG prices were, on average, 60% higher than before the war began, he said.
Slightly more than half of LPG consumption is for household cooking and heating, with the remainder used in petrochemicals and industry. That means the current energy crisis is directly affecting households, Birol said.
He said the agency was working with the energy industry to develop a new program and pointed to the IEA's existing oil stock release mechanism.
"When there's a serious problem in the market, disruption in the market, we release those stocks to the market," he said.
Birol said discussions with governments and industry were examining whether a similar security mechanism should be developed for LPG.
Turning to the broader crisis, Birol said energy issues could not be discussed separately from the crisis facing the world.
He recalled his warning shortly after it began that "we are facing the largest energy security threat in the history."
Nearly eight months after the war started, its effects were becoming apparent day by day, not only in oil and gas markets but also in fertilizers and other sectors, he said.
Birol said many people were watching crude oil prices slightly above $100 a barrel, while consumers actually use LPG, diesel or gasoline.
"Diesel prices are today two times higher than they were before the war started," he said.
Diesel is an important part of the economy, used in transportation, including trucks and buses, as well as electricity generation, industry and agriculture, Birol said.
Developments in the Middle East and damage to several Russian refineries meant diesel markets faced unprecedented challenges, he said. "The situation is very serious."
Diesel demand typically increases as winter approaches, while several refineries are entering maintenance, Birol said. This was the main reason he had recently joined discussions with G7 heads of state.
The IEA was doing its best to ease pressure on diesel markets and had already taken some steps, he said. It would continue those efforts and take additional action if necessary.
By Firdevs Yuksel and Handan Kazanci
Anadolu Agency
energy@aa.com.tr
