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The energy crisis gripping Europe could get much worse over the next years as the fallout from Russia's war in Ukraine extends over time, JP Morgan’s Jamie Dimon warned in an interview for CBS.
“The danger of this war is extraordinary,” Dimon told CBS, adding that it could last for years.
“But this oil and gas thing, it looks like the Europeans will get through it this winter. But this oil and gas problem is going to go on for years. So if I was in the government or anywhere else, I’d say, I have to prepare for getting much worse. I hope it doesn’t. But I would definitely be preparing for it to get much worse,” the chief executive of JP Morgan also said.
Commenting on the recent slump in oil prices, Dimon attributed it to the economic slowdown in China—prompted by the increase in new Covid infections and the government’s zero-Covid policy—and said that the price decline will only be temporary.
Indeed, the Chinese government has begun to relax Covid restrictions after protests erupted across several cities.
“Those things will reverse,” Dimon told CBS’s Margaret Brennan. “And this underinvestment in oil and gas, it will hurt you two or three years out. It’s quite predictable, but it’s not today.”
In these last remarks, Dimon echoes something that OPEC has been warning about for years: underinvestment in new oil and gas production. In other words, underinvestment is not a direct result of Russia’s invasion of the Ukraine. It dates further back and is more closely related to the energy transition push of Western governments rather than any reaction to the war.
“We need secure, reliable, cheap oil and gas,” JP Morgan’s Dimon also said during the interview. “The problem, you know, a lot of people think that oil and gas prices being high is good for CO2. It’s not.”
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
As a result oil and gas prices will continue to surge well into the future and the markets will face shortages.
And now that China is relaxing its lockdown, the markets could only get tighter and shortages bigger.
Against these realities, the global energy crisis will be with us for a number of years and therefore, we could expect inflation and recession to continue to last for a number of years too.
By comparison, the Western price cap on Russian oil exports and the EU’s proposed gas cap are child’s play and will soon be consigned to a waste bin.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert