Energy Prices Are Expected to Remain Elevated Over the Next 12 Months

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Analysts believe the recent increase in energy commodities will continue this year due to continuous geopolitical tensions and economic transitions.

The coal industry has not been slowed down despite the increased attention being paid to reducing climate change, with governments expanding their use of fossil fuels, particularly in Europe.

On September 2022, prices at Australia’s Newcastle port reached an all-time high of almost US$460 per tonne. While the “black gold” price is expected to remain above US$400 per tonne at year’s end.

“We still expect there will be strong demand for all types of commodities well into 2023 given that the global inflationary environment doesn’t seem to be abating any time soon,” Saxo Markets Australia CEO Adam Smith said.

Due to its position as the world’s top energy consumer, China has played a part in the rise in prices for energy commodities.

While the decision by Russia to invade Ukraine earlier this year, which started a war in Europe and fundamentally altered the geopolitical environment, served as the primary catalyst for the rally.

Due to the conflict, Western countries imposed tight economic restrictions on Russia’s energy imports, leading to global shortages and the transition of certain European countries to coal.

In a report released earlier this month, the International Energy Agency (IEA) estimated that if no steps are taken to transition to a low-carbon economy, global coal consumption will reach an all-time high in 2022 and stay there for the ensuing few years.

“As the global economy looks to transition away from fossil fuels and into green energy, it is a well-known fact that energy commodities such as coal, gas, and oil and industrial metals such as copper are required to facilitate the green transformation, so demand should remain strong for some time yet,” Mr Smith said.

This suggests that coal prices will continue to rise for the foreseeable future, possibly for years.

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