The world’s financial system is growing uneasy as the energy crisis intensifies. Investors who once bet on steady returns from energy assets now face rising uncertainty over whether governments can prevent shortages and price shocks. Analysts at Goldman Sachs warned this week that volatility in energy markets could spill into broader financial systems if central banks fail to act decisively.
Central banks have raised interest rates to curb inflation, but this move has also increased the cost of financing energy projects. Norway’s sovereign wealth fund, the world’s largest, reported a 14% drop in second-quarter returns, largely driven by losses in energy stocks. The fund’s managers now say they may reduce holdings in oil and gas to limit exposure to further shocks.
Europe’s energy grid remains fragile after Russia cut gas supplies last year. Germany’s industry minister admitted last month that the country’s shift away from Russian gas has not progressed as planned. Industrial output in energy-intensive sectors has already fallen by 5% in the past year, according to federal statistics.
In Asia, Japan and South Korea are stockpiling fuel to avoid winter blackouts, but traders report that spot prices for liquefied natural gas have surged 40% since June. The International Energy Agency said global oil demand will hit a record 103 million barrels per day by September, straining already tight supplies.
Analysts say the next six months will test whether governments can stabilize markets or if the crisis will trigger a broader economic slowdown. The European Central Bank has signaled it may pause rate hikes if energy-driven inflation persists.
Source: e24.no