IEA analysis offers hope for climate action but says inflated oil price may slow global economic recovery from Covid-19
Rising oil prices could help speed climate action by accelerating the shift to electric vehicles, but would come at the expense of the economic recovery from the Covid-19 pandemic, according to the global energy watchdog.
The world’s demand for crude surged by an average of 3.2m barrels a day (b/d) in June compared with the previous month but the return of oil production has failed to keep pace, triggering a steady rise in market prices.
The International Energy Agency (IEA) warned that oil prices, which climbed by two-thirds this year to highs of $77 a barrel earlier this month, could climb higher and lead to market volatility unless big oil producers pump more barrels.
“While prices at these levels could increase the pace of electrification of the transport sector and help accelerate energy transitions, they could also put a drag on the economic recovery, particularly in emerging and developing countries,” the IEA said.
US drivers are already facing record high prices to fill up their tanks due to rising oil market prices. The price per gallon reached an all-time high of $3.14 on Monday, and analysts have warned that the price could climb to $5 a gallon.
As a result, the cheaper price of running an electric vehicle may encourage more motorists to make the switch sooner than planned, boosting efforts to cut emissions from transport. But higher fuel prices could also stoke cost inflation across the global economy, particularly in developing countries.
Read more: The Guardian