Oil price recovery, along with any other recovery, revolves around the vaccine against the coronavirus, the head of the International Energy Agency (IEA) said on Tuesday.
Speaking at a meeting held by the Association of Economy Journalists (EGD), Fatih Birol said the oil industry took the largest hit from the pandemic that negatively affected the global energy sector.
Given the unused global oil stock, Birol said that recovery would be slow.
"Currently, oil prices are very low, at around $50. I do not think that oil prices will rise to a level of $70 in a short time. There is great uncertainty in the oil market and it may take a long time for demand to recover.”
He said even if a viable vaccine becomes widely available, “only a little recovery is expected in the markets.”
He further warned that a third wave of the outbreak may hit oil prices again, which would not be good news for US shale oil “which needs a level of $40 to be profitable.”
Such low oil prices will also cause serious economic and political problems in countries whose economies and social lives depend on oil and gas revenues, he added.
- Solar energy is ‘new king’
With the exponential growth in renewables, and solar power in particular, he foresees that this energy source will outpace oil. “Once coal was king, but the new king is solar energy,” he said.
"Next year, the world energy agenda will be determined by renewable energy and how countries worldwide handle it,” Birol said.
He envisages that this shift will be seen in the US, the world’s largest economy, where energy policies under the new Biden administration coupled with growing interest in renewable energy will become a significant signal for investors in the US and throughout the world.
“In this respect, the election in the US will seriously change the world’s energy and climate balances,” he added.
By Sibel Morrow