The current energy crisis is being mentioned in various parts of the world, and the markets are already beginning to worry about this situation.
As expected after a pandemic, global recovery should come quickly. However, inflation is behaving exponentially in several countries of the world, generating serious economic problems as a result.
Electricity prices have hit record highs in recent weeks, driven by shortages in Asia, Europe, and the United States, and China's energy crisis is expected to drag on until the end of the year and slow growth in the world's second-largest economy and top exporter.
The world's major economies, such as the United States, China, Japan, the United Kingdom, India, and Europe, have taken additional steps to control rising energy prices. The rise in prices has generated the so-called energy crisis that everyone talks about. The impact of supply crunches in power and manufacturing components is showing up in data from Tokyo to London, adding fears in global markets.
A sell-off in global stocks and bonds extended into Tuesday, taking short-dated U.S. Treasury yields to 18-month highs, while world stocks fell for a third straight day on fears that energy prices were putting a dampener on economic growth.
In Japan, inflation data hit its highest level in 13 years last month, while shoppers in Britain cut back on spending and China posted a 20% drop in car sales.
China Takes Steps To Curb High Energy Prices
In response to shortages in power generation caused by shortages and record coal prices, the Chinese government has taken a series of steps to boost coal production and manage electricity demand at industrial plants.
To help power companies pass on the high costs of coal, the National Development and Reform Commission (NDRC) said that all electricity generated by coal plants would be priced through the market ordered "as of October 15.
It also instructed commercial and industrial users to buy directly from the market or through online agents "as soon as possible," Reuters said in a report.
Addressing a press briefing, NDRC official Peng Shaozong said the reform was "designed to reflect power demand and consumption, and to some extent to ease operation difficulties of power firms and encourage plants to increase power supply."
China's most active thermal coal futures contract soared 11% to a record 1,507.8 yuan ($233.55) today.
India Also Takes Steps To Protect Itself
India recently authorized power producers to blend imported coal with local coal to meet the current surge in demand.
Asia's third-largest economy is facing large-scale supply cuts as several power plants are low on coal stocks as a result of the sharp rise in global energy prices. India has also decided to penalize utilities that sell power to exchanges to take advantage of rising prices but hurt the current low supply. The ministry said it had ordered power companies to increase supply to Delhi, whose chief minister warned Saturday of a possible power crisis.
Oil Benefits From High Prices
Oil rose to $84 per barrel, very close to a three-year high, as a rebound in global demand following the COVID-19 pandemic led to price hikes and shortages in other energy sources. Coal has reached record highs and gas prices remain four times higher in Europe than at the beginning of 2021.
Although OPEC+ is increasing production monthly to cope with recovering demand, the oversupply appears to be growing.
The price of Brent crude has soared by more than 60% this year, supported by OPEC+ decisions as well as record gas prices in Europe.
Brent crude s currently trades in the area of $83.61, very close to its highest since October 2018. Meanwhile, U.S. benchmark WTI crude oil gained reached $82.18 today its highest since late 2014.
The sharp rise has put pressure on OPEC+ from consuming countries, and a U.S. official said Monday that the White House stands by its calls for oil-producing countries to "do more" to ease the situation.
A Russian official said Tuesday that energy giant Gazprom has begun using its inventories to pump more natural gas into the pipeline network to stabilize rising prices.
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