NEW DELHI: Energy prices are expected to fall by 11% in 2023 as global growth is likely to slow down, according to a World Bank report. According to the World Bank’s commodity outlook, energy prices after surging 60% in 2022 will decline 11% in 2023 and 12% in 2024.
It sees Brent crude oil averaging $92 a barrel in 2023, before easing to $80 in 2024. The decline in prices will be driven by slower global growth, weaker demand for natural gas as households and industry reduce consumption, and some supply responses, primarily for coal.
However, the report says that energy prices will remain more than 50% above their five-year average through 2024. The World Bank report further predicts that persistently high energy prices will continue to have inflationary implications, particularly through second-round effects such as higher transport and electricity costs for businesses.
“Inflationary pressures stemming from commodity prices will be further exacerbated in countries that have had sizeable currency depreciations against the US dollar,” the report says. Meanwhile, the International Energy Agency (IEA) in its energy outlook has said that energy markets and policies have changed as a result of Russia’s invasion of Ukraine, not just for the time being, but for decades to come, the International Energy Agency (IEA) said on Thursday. According to a report by IEA’s World Energy Outlook, the global energy crisis is causing profound and long-lasting changes that have the potential to hasten the transition to a more sustainable and secure energy system.
“With unrelenting geopolitical and economic concerns, energy markets remain vulnerable, and the crisis is a reminder of the fragility and unsustainability of the current global energy system,” reads the report. The report advocated for stronger policies to drive the huge rise in energy investment that is needed to cut the risks of future price spikes and volatility. It said subdued investment due to lower prices in the 2015-2020 period made the energy sector much more vulnerable to the sort of disruptions we have seen in 2022.
“While clean energy investment rises above $2 trillion by 2030 in the States Policies Scenario, it would need to be above $4 trillion by the same date in the Net Zero Emissions by 2050 Scenario, highlighting the need to attract new investors to the energy sector,” reads the report.