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Oil prices fall as IEA warns energy crisis may worsen

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Yahoo Finance anchors discuss the energy markets as oil prices decline.

Video Transcript

- Let's stay on the issue of energy. We got some commentary today out of the International Energy Agency. Executive director Fatih Birol saying-- or offering a warning, I should say, saying the worst is yet to come. Here's specifically what he said at the Sydney Energy Forum. The world has never faced an energy crisis like this in terms of its depth and complexity. We have not seen the worst of it yet.

And Brian, this got a lot of attention obviously because we've been talking about oil prices coming down just a bit, you know, gas prices coming down. He's saying, look, the demand and the supply constraints that we're seeing are going to continue. And specifically he highlighted Europe saying the winter in Europe will be very, very difficult. Obviously less-- more capacity coming offline from Russia. We heard from him saying there's got to be more diversity in the energy source. And that's not just about fossil fuels but renewable energy as well.

- Yeah, and I think that-- I mean, the commentary from the IEA has gotten a lot of attention this morning, and rightly so. Any time someone hears, well, it's going to get worse before it gets better, that's going to catch your attention. But I think we have to recognize that those comments are agnostic to the price of barrel of oil, right? That doesn't mean that it's, OK, well, oil prices are going to go down, because that could be good from an inflationary standpoint even if it's bad for those that are actually pumping the oil.

But I mean, I think the story right now is just exactly what you said. The equilibrium is resetting, and there's no reason why we should expect that equilibrium to be found any time soon. And I think that's what perhaps the IEA is getting at when you consider what's going to happen if China shuts down again. You see the news headlines coming out of Shanghai with the risk of possible shutdown again.

What happens if recession sinks demand in the United States, in the Eurozone. That's very much going to remain a part of the story as well, which is interesting because you kind of wrap all these things around the other headline we got this morning from OPEC where they did not change their forecast for demand growth this year, right?

- No change in forecast for demand growth this year. They did say they expect further growth next year but slowing growth. So we're talking about 2.7% more. But they did highlight China as well, that they anticipate more demand coming out of China as we continue to see the recovery. Of course, as we've watched, it's a very unpredictable story with China because of the stop and go, especially around COVID. So something we're going to be watching closely.