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Global oil crisis and inflation hurt consumers: World Energy Council


The current oil crisis isn’t like previous ones — and consumers will have to bear the brunt of it even as they grapple with rising inflation, Angela Wilkinson from the World Energy Council told CNBC.

This is not the same crisis as the oil shock crisis of 1970s and it is the first major global energy shock. This is a … consumer driven crisis and the consumer-driven adjustments that are going to come out of this are going to be very significant,” Wilkinson, secretary general at the organization, told CNBC’s “Capital Connection” on Thursday.

Oil prices rose after Russia invaded Ukraine late February. This caused major supply disruptions worldwide in the sector. Western countries also imposed heavy sanctions on Moscow as a result.

The European Union also has proposed a gradual ban on Russian oilThis will increase energy price pressure.

The international benchmark price was at its highest as of Friday morning, in Asia. Brent crude futuresSince the beginning of the year, it has risen more than 42%. The last time it traded was at $111 per barrel. This is far more than the $80 levels seen in early January.

The consumer is really really suffering.

Angela Wilkinson

Secretary General of the World Energy Council

The whole world was witness to a number of oil shocks in the 1970s as a result of conflict in the Middle East.

Following their assistance to Israel during World War II, 1973 saw the Middle Eastern oil producers cut off supply from the U.S. Arab-Israeli war that year. A second energy shock occurred after the 1979 Iran revolution, which saw the Shah of Iran expelled.

“If you look at the price of … refined products in many parts of the world, they’re now unaffordable for many of the bottom half of societies,” Wilkinson warned. “We’re going to have to see some form of massive reallocation of … money coming out of … this crisis. “Consumers are truly, seriously hurting.”

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Inflation in the U.K. soared to a 40-year high in AprilThis was partly due to rising energy prices as per official data. Similar increases in US prices can also be seen. consumer inflation remained near 40-year highs in April.

“A mere six months ago we spoke only about climate security. Wilkinson stated that a year ago we had been discussing the Covid crisis, and its recovery. “Now we’ve got this rolling series of crises in energy – Covid, climate, conflict. We now have a cost-of-living crisis in many countries.

“The greatest challenge will be the new context for affordability and energy justice,” she said. This is a huge uncertainty that requires policy innovation, as well as a different approach to international collaboration.

— CNBC’s Patti Domm contributed to this report.