A weak China may be good news for oil markets, says IEA's Fatih Birol

“I don't see any relief coming soon in the oil market,” says Fatih Birol, Executive Director of the International Energy Agency (IEA) in a conversation with CNBC-TV18's Shereen Bhan on the sidelines of the ongoing World Economic Forum's (WEF) annual summit at Davos.

Russia, which was the number one oil exporter in the world, now faces sanctions because of the war in Ukraine and thus there is a severe supply dearth in the market.

“Unfortunately, we do not see another country replacing Russian oil quickly,” said Birol.

Demand on the other hand is rising as the world is trying to come out of the pandemic lull and this will create an imbalance in the demand-supply of the commodity.

“The only positive factor is if the Chinese economy remains weak as a result of the lockdown restrictions. China being a major oil importer, if as a result, Chinese oil imports is much weaker than before, this may provide some comfort to the markets,” he mentioned.

The IEA director is very much of the belief that the answer in the long term lies in renewable and nuclear energy.

“I have rarely seen the combination of economics, energy security or national security and the climate commitments. These three factors coming together, it's a very powerful combination and it may give a strong momentum of energy policy change, and looking at the much more secure and cleaner options ranging from renewable energy to nuclear power, from nuclear power to have trade with some reliable partners,” he said.