Oil demand increases
Global demand for oil and gas is set to rise this year. One of the driving forces behind this demand is China, whose economy is rebounding after strict pandemic restrictions were still in place last year. As China gets back to normal, its use of oil and gas is expected to increase, which will have a significant impact on the global market. The impact this could have on the UK energy market could lead to consumers seeing high gas and electricity prices again.
Demand for oil is not going to be the only issue. The reduction of oil production from some of the biggest exporters in the world has impacted the supply, resulting in a further push in prices. This development could have an overall effect on the market. While the percentage of oil in the UK energy mix is one of the smallest, the implication and the ramifications of a potential increase in energy prices could create a ripple effect globally.
Russia threatens gas shortages
The global energy market is facing a double whammy in the coming months, with both China's increasing demand for oil and Russia's threat of gas shortages to the EU this winter. Russia has sent a warning shot across Europe's bow, indicating that gas supplies may be constrained this winter. These twin developments could lead to significant price volatility and disruptions in energy markets, impacting consumers and industries alike.
Russia's energy giant, Gazprom, has issued a warning that Europe could be facing a shortage of gas this winter if the weather is not as mild as last winter. The unforeseen turn in events could lead to a hike in gas prices across the wholesale market, ultimately affecting economies worldwide. It remains to be seen how Europe's policymakers will manage this new obstacle, and whether alternative solutions will be found to alleviate the impact of the potential gas shortages.
What does this mean for business energy contracts?
The fall in gas prices since 2022 may have given consumers a sigh of relief, but the factors above still pose a potential risk of causing those prices to skyrocket once again. These factors, if not overseen carefully, could turn out to be a major setback for businesses that have already been struggling to keep up with inflation. It's important for consumers to stay informed and aware of these factors so that they can take necessary measures to mitigate any future price hikes. With responsible and proactive measures, we can work to keep gas and electricity prices stable and affordable.
If you know that your business energy contract is coming to an end sometime this year it might be best to look at prices now before gas and electricity price rises take effect. Waiting could lead you to have no choice but to sign with expensive rates causing extra pressure on our budgets, which are most likely already spread thin. To avoid this compare prices with us today.