Energy Security & Stable Markets After COVID-19
Energy security and market stability are the pillars of the IEF producer-consumer dialogue. Dialogue and collaboration among producers and consumers were instrumental to absorb the impact of various energy market disruptions in the past and underpins investment in longer-term energy market stability.
COVID-19 inflicted a shock on stable energy markets that is unique in the history of producer-consumer relations in internationally traded energy markets. Never, not even during the Global Financial Crisis of 2007-2008, have stakeholders experienced such a sudden and steep drop in global energy demand as in the second quarter of 2020 when oil consumption alone dropped by more than 20 million barrels per day in the world's most important commodity market.
Global energy markets have recovered through the joint efforts of energy producing countries in the OPEC-plus group as well as closer collaboration between G20 and IEF member countries.
However, the crisis created by the pandemic raises many new issues about extreme energy market volatility and understanding how market mechanisms and fundamentals drive energy markets forward. Dialogue and collaboration on energy market security and data transparency, as well as available spare capacity, inventories, and collective emergency response and prevention measures has never been more important.
As a result, the IEF has launched a new series of expert roundtables, issue briefs and analysis and other initiatives to examine these impacts of COVID-19 on energy markets and energy security.
In addition, the IEF continues to work with its member countries, industries, and partner organisations to deepen collective insight and take the energy dialogue forward on a steady heading in a rapidly changing risk environment. This includes the IEF’s annual energy outlook symposium and collaboration in the trilateral work program with the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) to enhance understanding of short-, medium-, and long-term energy market and policy developments as well as physical and financial energy market interactions.
Energy producers and consumers share a growing responsibility to maintain global energy market stability and cushion excessive market swings. Global economic shifts continue to move the centre of gravity in global energy markets from the Atlantic to the Pacific regions. Growing volumes of energy products, goods, and services traded across more borders creates new risk to energy market stability as installations along lengthening energy supply chains and networks prove more vulnerable to cybersecurity threats, international tensions, and conflict. Dialogue and collaboration among producer and consumer countries on emergency preparedness and response measures, including data transparency on spare capacity and strategic stocks, helps to keep market volatility at acceptable levels, and allows for prompt and adequate responses to future market shocks and disruptions.