The Bank of Korea Says "Energy Price Increase Trend to Continue Until Early Next Year"

Announcement on the 21st: 'Review of the Recent Situation in the Global Energy Market'

[Asia Economy Reporter Jang Sehee] The Bank of Korea analyzed that the global energy price rising trend will continue until early next year.

In the report titled 'Review of the Recent Situation in the Global Energy Market' published in the Overseas Economy Focus on the 21st, the Bank of Korea stated, "The supply-demand imbalance is expected to continue until early next year considering the seasonal factor of the Northern Hemisphere winter, and then gradually ease."

Regarding the recent sharp rise in global energy prices, it evaluated, "It is the result of a combination of structural factors, including a short-term supply-demand imbalance revealed during the process of overcoming the COVID-19 crisis and the promotion of carbon neutrality policies amid insufficient preparation for energy transition."

Major institutions such as the U.S. Energy Information Administration (EIA) forecast that oil prices, including crude oil and gasoline, will remain high until this winter but will gradually stabilize afterward.

The recent surge in natural gas prices is due to a combination of structural factors such as ongoing supply-demand imbalances during the pandemic recovery process, conflicts between Europe and neighboring countries, changes in market trading practices, and energy transition policies.

While demand has significantly increased due to global economic recovery, supply expansion is constrained by maintenance and reduced investment. Additionally, structural factors such as conflicts between Europe and Russia, an increase in the proportion of short-term contracts, increased coal replacement demand due to carbon neutrality, and reduced investment incentives due to expected natural gas regulations are also deepening the supply-demand imbalance.

The coal market supply-demand imbalance is attributed to increased electricity demand and coal production disruptions, and structurally, it is due to a lack of stable power supply sources caused by carbon emission reduction policies.

Meanwhile, the Bank of Korea noted, "Natural gas is perceived as a relatively clean energy compared to other fossil fuels, so demand may remain firm during the transition to carbon neutrality, which may require more time for price stabilization," and added, "Due to the structural factor of promoting carbon neutrality, energy price increases may be prolonged, and the possibility of unexpected supply-demand imbalances occurring frequently cannot be ruled out."

This content was produced with the assistance of AI translation services.