It is difficult to solve the problem in the short term High oil prices are hindering the steady recovery of the world economy

International oil prices have recently risen
on the spur of heightened geopolitical risks.
Oil will remain indispensable in the coming decades, but the global structural shift in the alternative of fossil fuels with clean energy is already underway
.
It is necessary to find a balance between supply and demand from the energy transition, and try to avoid serious structural contradictions between supply and demand, resulting in energy shortages
.

While the world economy is under the high cost pressures of inflation, international oil prices are also rising under the stimulus of increased geopolitical risks
.

On Tuesday (February 22), the price of Brent crude oil futures in London rose to $99.
50 / barrel intraday, the highest level
since 2014, spurred by rising tensions between Russia and Ukraine.
As of the close of the day, light crude oil futures for March delivery on the New York Mercantile Exchange closed at $92.
35 per barrel, up 1.
4 percent
.
Analysts expect oil prices to rise to the $100/barrel level
soon.

The market's high sensitivity to geopolitical events that can lead to tight supplies is the reason for
the relatively large fluctuations in oil prices at present.
However, from the current market speculation, it is no longer important to predict the short-term trend of crude oil prices, the key is how to ensure a stable recovery of the economy and society in the context of high oil prices
.

Why does the market mostly believe that an increase in oil prices is inevitable? There are many reasons, such as the serious shortage of investment in oil and gas exploration in traditional fields in recent years, the decline of energy storage in major oil-producing countries, the strong recovery of oil demand in economic recovery, and the short-term uncertainty brought about by geopolitical conflicts
.
A more important reason is that the global "water release" under the epidemic has caused the most serious inflation in decades, and the cost of raw materials, commodities and upstream and downstream production has risen
continuously.
The combination of inflation and rising energy prices has led to a slowdown
in world economic growth.
The main topic of the first G20 finance ministers' meeting this year was also how to deal with inflation and curb excessive price increases
.
Many economists believe that crude oil prices are not as closely related to inflation as they used to be, but could exacerbate the impact of inflation on
economic growth.
Research models suggest that oil prices of $100 a barrel would raise inflation in the United States and Europe by about 0.
5 percentage points; a price of $150 a barrel would soar inflation above 7 percent and the world economy would stagnate
.

The increase in prices brought about by high oil prices should not be underestimated
.
According to statistics, fossil fuels, including oil, coal and natural gas, together account for 80% of global energy consumption, and the average price of a basket is more than
50% higher than a year ago.
The study shows that consumers' expectations for future inflation are based in part on the real price increases they have experienced recently, with fuel prices being very representative
.
The U.
S.
Department of Labor released the Consumer Price Index (CPI) in January to a 40-year high, and U.
S.
consumers' inflation expectations for the coming year nearly doubled to 4.
8 percent, compared with 2.
6 percent
in the same period last year.
Rising oil prices have left the U.
S.
government in a big way, and expectations of the Fed to speed up the pace of rate hikes are heating
up.

Oil will remain indispensable
for decades to come.
Today, petroleum products account for about 3% of global GDP and remain one of the most important commodities in the
world.
However, the global structural change of clean energy instead of fossil fuels is already underway, and we need to find a balance between supply and demand from the energy transition, and try to avoid serious structural supply and demand contradictions, resulting in energy shortages
.

In the process, it is important
for the world to achieve stable oil supplies or lower energy prices, and indirectly control inflation.
The United States has repeatedly pressured Saudi Arabia to increase production and release 50 million barrels of crude oil from the Strategic Petroleum Reserve, while other major oil consumers are also taking steps to stabilize oil prices
.
The U.
S.
Congress has even proposed a moratorium on federal gasoline taxes to quell public discontent over
soaring gasoline prices.
The International Energy Agency has also repeatedly called for OPEC+ to increase supply
to the market.
The gap between OPEC+ production and its production quota widened to 900,000 b/d in January, and with world crude inventories consistently low, crude oil price volatility will increase
.

The world economic and social landscape has undergone fundamental changes, the oil crisis of the 1970s will not repeat itself, and the page of "oil shortage" in human history has been turned over, and it will be replaced by sustainable and renewable clean energy
.
Accelerating energy transformation and pursuing green development is the only way to go, and it is also the trend
of today's world.
Statistics show that global spending on green energy investment in 2021 grew 27% year-on-year to a record $755 billion
.
At the same time, M&A transactions in the related green energy sector are quite active, including more and more emerging energy industries such as hydrogen production projects, electric vehicles and biofuels
.

Oil prices are expected to fluctuate for a long time, with increased demand and tight supply struggling to be resolved
in the short term.
Therefore, the international community needs to work together to ensure the stability of energy supply, so as to provide sufficient impetus
for economic growth.