Global energy prices are likely to continue rising until the end of winter in the northern hemisphere, which could undermine the post-Covid-19 economic recovery in energy importing countries and hurt lower-income groups.
Higher prices are expected to undo the fragile recovery of the global manufacturing sector, continue supply chain challenges and increase pressure on energy transition plans.
The American "world view stratfor" website says that if oil prices remain within $70 and demand for natural gas rises, there will be significant impacts on the global economy.
The natural gas market in the United States is still immune to developments in the global market, but on a global level, energy markets are expected to live in a difficult situation in the coming months, with the possibility of higher prices by winter in the northern hemisphere, according to the American website.
It is noteworthy that oil prices rose today, Tuesday, to their highest levels in at least 3 years, to continue the gains made in the previous session, after the major oil producers in the world announced their decision to maintain a curb on crude supplies.
The price of oil rose to 81.49 dollars a barrel, while the US West Texas Intermediate crude rose to 77.74 dollars.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, within the framework of the OPEC Plus group, said on Monday that they will maintain an agreement to increase oil production only gradually, ignoring calls from the United States and India to raise production as the global economy recovers from the Corona virus pandemic, Albeit intermittently, as reported by Reuters.
The Americas
The site says that rising energy prices in Latin America and the Caribbean will lead to social unrest coinciding with high inflation, and governments in Latin America and the Caribbean are likely to increase social benefits and tax breaks in an attempt to mitigate the effects of higher prices on low-income families.
In countries with high fiscal deficits such as Brazil and Mexico, additional spending on aid will increase financial pressures on governments, especially as countries in the region are still gradually recovering from the effects of "Covid-19".
Higher prices in Brazil and Mexico could help fund more government subsidies and social welfare programs, as well as increase profits for state-run energy companies and raise tax revenues. Higher energy prices would also benefit Argentina and other countries by raising taxes and tariffs on oil.
It is expected that emerging oil producing countries such as Colombia, Guyana and Suriname will attract more foreign investment, but it is unlikely that major European companies will contribute to boosting production in these countries because of their focus on investing in non-polluting energies.
Rising energy prices in Latin America and the Caribbean will lead to social unrest coinciding with high inflation (Reuters)
Asia and the Pacific
The site predicts that rising energy prices will lead to disruptions and blackouts in China with the onset of winter, and higher prices and policies to reduce emissions may cause shortages in energy supplies across China.
Energy producers are in a big predicament as Beijing continues to restrict electricity price hikes, which has caused the closure of many power plants, and if the Chinese government allows energy prices to rise or subsidizes producers, this will lead to a rise in Chinese demand for energy, which is good for domestic coal producers. , but it will raise global prices for other fuels.
Southeast Asian countries and Japan rely more on liquefied natural gas - imported at high prices - to overcome the problem of high electricity consumption in the winter, and it is expected that the governments of these countries will intensify efforts to explore and extract liquefied natural gas, and invest in alternative energies, such as nuclear energy. In the case of Japan.
South Korea and Japan may face a similar situation last winter with rising LNG prices in Asia.
Similar to China, high energy prices will hinder the recovery in East and Southeast Asian countries, especially as most of these countries are considering reopening their economies despite the continuing outbreak of the “Covid 19” virus, according to the American website.
Eurasia
The site believes that Russia will benefit from higher energy prices, despite all accusations of market manipulation, and the rise in prices will benefit the state-owned Gazprom, the giant oil company Rosneft, as well as private Russian companies such as NOVATEK, a liquefied natural gas producer.
Energy revenues will provide a boost to the Russian economy and help ease restrictions on the federal budget. Other oil and gas producing countries in the region will also reap the benefits of higher prices, namely Kazakhstan, Azerbaijan and Turkmenistan.
The rise in energy prices to record levels in Europe is expected to bolster accusations of Gazprom and other Russian producers of engaging in Kremlin-supervised efforts to pressure European countries.
Russia is currently seeking to persuade Europe to approve the Nord Stream 2 pipeline project, to be commissioned once its ratification is completed in January 2022.
Energy revenues will provide a boost to the Russian economy and help ease restrictions on the federal budget (Reuters)
Europe
Higher energy prices are set to derail Europe's post-pandemic economic recovery and are fueling social unrest.
Industries are also expected to face higher operating costs, higher costs of living for consumers, and in the UK for example, lower wind speeds may reduce their contribution to energy production.
If the continent experiences a cold winter and needs natural gas supplies above normal levels, it will face great competition for liquefied gas imports with East Asian countries, and this may lead to the suspension of the work of many European companies in various sectors of the economy and to high inflation rates throughout Europe.
Governments may provide more subsidies and tax breaks to mitigate the impact of high energy prices, but this assistance will be at the expense of budgets that suffer from high deficits, and this will make it more difficult to return to fiscal discipline in the short and medium terms.
Middle East and North Africa
Higher energy prices will benefit many governments in the Middle East and North Africa region, which has the world's largest oil and gas reserves.
Revenues will provide an outlet for heavily indebted countries, which rely heavily on energy exports such as Iraq and Algeria, as they will help finance the most important budget items such as public sector salaries, which have fallen due to reduced demand for oil during the Corona pandemic.
It is expected that the Gulf countries will be able to inject more money into economic diversification efforts, according to the US website.
However, if prices continue to rise for a long time, this may lead to the continued dependence of the countries of the Middle East and North Africa on energy revenues, and reduce their competitiveness in global markets.
According to the site, higher prices threaten to disrupt economic recovery in the near term in countries such as Lebanon and Turkey, where the additional cost will lead to higher prices and higher inflation rates.
Gulf countries may be able to pump more money into economic diversification efforts with rising energy prices (Reuters)
South Asia
In South Asia, high energy prices may impede economic recovery efforts, as the countries of the region depend largely on imports. India, for example, imports more than 85% of its oil needs, and fuel prices have witnessed a noticeable rise in recent months, coinciding with the progress of campaigns Vaccination and easing of lockdown procedures.
It is expected that Pakistan - which depends to a large extent on imports of liquefied natural gas to cover its electricity needs - an increase in inflation and blackouts in the coming months.
Sub-Saharan Africa
The site believes that energy producers in the African continent will find it difficult to meet consumer demands and avoid any social unrest, while oil-producing countries in sub-Saharan Africa will reap the benefits of higher prices, namely Angola, Nigeria, Equatorial Guinea, the Republic of Congo and Gabon.
These countries will try to take advantage of the revenues to support efforts to recover from the Corona pandemic and improve their financial situation, but if governments do not use the oil gains to increase public spending, the citizens of these countries will not notice a significant improvement in the standard of living.
In Nigeria, which is the largest energy producer in sub-Saharan Africa, high oil prices will put the government in a difficult position regarding fuel prices, as the deterioration of the refining sector makes the country more dependent on imports.
Consumers across sub-Saharan Africa are suffering from higher prices for food, water, gas and other basic goods, and prices have risen in the east of the continent due to the ongoing drought, and the cost of living in the countries of the region is 20% higher than it was in the same period last year.