Egyptian LNG production increased slightly amid rising prices (World Bank)

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Liquefied natural gas (LNG) production rose slightly in some countries amid rising prices, including Australia, Egypt and Qatar, according to the World Bank’s latest Commodity Market Outlook report .

The report says natural gas production has fallen sharply in Russia – down 17% in August 2022 (y/y) – as the country has few options to redirect exports given dependence on gas pipelines to Europe.

The report adds that this shortfall has been partly compensated by increased supplies from other countries. Production in the United States increased by 10% in the third quarter of 2022 (y/y). The number of natural gas rigs has increased, and there has also been an increase in production associated with crude oil production. LNG exports from the United States hit a record high in May, with a sharp increase in exports to Europe, although they fell in June following an explosion at the Freeport LNG terminal. This facility represents approximately 17% of US LNG export capacity.

The decline in the value of the currencies of most developing economies is driving up food and fuel prices in ways that could worsen the food and fuel crises many of them are already facing, the report says.

High prices for energy products that serve as inputs for agricultural production have pushed up food prices. In the first three quarters of 2022, food price inflation in South Asia averaged above 20%. Food price inflation in other regions, including Latin America and the Caribbean, the Middle East and North Africa, sub-Saharan Africa, Eastern Europe and Central Asia, has averaged between 12 and 15%. East Asia and the Pacific is the only region where food price inflation is low, in part due to generally stable prices for rice, the region’s staple food.

“While many commodity prices have retreated from their highs, they remain high relative to their average level of the past five years,” said Pablo Saavedra, World Bank Vice President for Equitable Growth, Finance and Development. the institutions. “A new spike in global food prices could prolong food insecurity problems in developing countries. A range of policies are needed to promote supply, facilitate distribution and support real incomes.

Since the outbreak of war in Ukraine, energy prices have been quite volatile, but are now expected to decline. After jumping about 60% in 2022, energy prices are expected to fall 11% in 2023. Despite this moderation, energy prices next year will still be 75% above their five-year average. last years.

The price of Brent crude oil is expected to average $92 per barrel in 2023, well above the five-year average of $60 per barrel. Natural gas and coal prices are expected to decline in 2023 from record highs in 2022. However, by 2024 Australian coal and US natural gas prices are expected to double further from the average of the past five years, while European natural gas prices could be almost four times higher. Coal production is expected to increase significantly as several major exporters ramp up production, jeopardizing climate change goals.

Agricultural prices are expected to fall by 5% next year. Wheat prices in the third quarter of 2022 fell nearly 20% but remained 24% higher than a year ago, the report notes.

The outlook for commodity prices is subject to many risks. Energy markets are facing significant supply challenges as concerns over energy availability next winter will intensify in Europe. Higher-than-expected energy prices could spill over into non-energy prices, especially food, prolonging food insecurity issues. A more pronounced slowdown in global growth also presents a major risk, especially for crude oil and metals prices.

Concerns about a possible global recession next year have already contributed to a sharp decline in copper and aluminum prices. A special section of the report examines the drivers of aluminum and copper prices and explores the implications for emerging markets and developing economies that export these products. Prices will likely remain volatile as the energy transition unfolds and demand shifts from fossil fuels to renewables, which will benefit some metal producers. Metals exporters can make the most of the resulting growth opportunities over the medium term while limiting the impact of price volatility by ensuring they have well-designed fiscal and monetary policy frameworks, the report stresses. report.



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