The current energy crisis can raise prices and threaten economic recovery

The situation in Europe could jeopardize the continued recovery of a fragile global economy, according to analysts who spoke on February 25. Continued geopolitical tensions, such as those now involving Russia and Ukraine, are expected to further limit global energy supplies and push up commodity prices, making the recovery of a fragile global economy even more difficult.

Escalation of hostilities could pose significant risks to raw material exports and supplies, further rising energy classes and already high prices for metals, JP Morgan warned in a report against the global energy balance. Russia’s impact is considerable, and oil is one of the most likely commodities to be affected if the situation worsens. In fact, Russia, with a market share of over 10%, is one of the largest oil producers in the world. However, it is also the world’s largest producer and exporter of fuel oil and a major producer of aluminum, nickel, palladium and copper.

Luo Zuoxian, Head of Intelligence and Research at Synopec’s Institute for Economic Development, said the potential instability in Europe poses significant risks to the global economy on the verge of recovering from the shock of the COVID-19 pandemic. .. There is a risk of accelerating inflation and market turmoil, which will slow the recovery of the global economy by further pushing up already high energy prices.

Rising international bulk commodity prices have already pushed up corporate production costs, making it more difficult for the global economy to recover after COVID-19, Luo said. However, he added, China is unlikely to face oil and gas shortages, although the rapid domestic economic recovery has helped China’s oil prices rise. However, he said rising oil prices would increase the cost of China’s manufacturing industry, as China is heavily dependent on oil imports.

He also suggested that China continue to develop new energy industries, encouraging investment in low-carbon technologies, energy conservation and emission reductions to reduce the proportion of fossil fuels in its energy mix.

On February 24, benchmark US crude and Brent surpassed $ 100 a barrel in intraday trading, raising oil prices.

Oil prices have been kept high due to low capacity, low investment and low inventories since the outbreak of COVID-19, according to Gu Shuangfei, advisory director of Nanhua Futures, further the situation between Russia and Ukraine. It is expected to rise. World prices for oil in the near future.

At the same time, the prices of raw materials such as aluminum, nickel and zinc are rising. Zhu Yi, senior metal and mining analyst at market watcher Bloomberg Intelligence, said aluminum prices on the London Metal Exchange have reached record highs and could rise further. China’s aluminum supply is slowly recovering from last year’s electricity shortage, and European smelters are cutting production due to high electricity costs, she added.

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