- There may be no quick fix to the energy crisis, a Goldman analyst said, citing dwindling OPEC capacity.
- The cartel only has the capacity to add 1 million barrels a day, the lowest volume in 20 years.
- That spells trouble for the West, as nations struggle to secure more energy supply in time for winter.
Western leaders are scrambling for a solution to a potential energy crisis as Russia pulls oil and gas products away from sanctioning nations, but there is no near-term fix for the world's energy problems, a Goldman Sachs analyst said, spelling trouble as the West gears up for the winter.
"I don't think there is an immediate solution," Goldman Sachs analyst Michele Della Vigna said in an interview with CNBC.
G7 nations are currently discussing a potential price cap on Russian oil to lower costs, aiming to propose the plan to by December 5. President Biden has also been looking to secure more supply for Europe as Russia cuts it off from its natural gas flows, recently traveling to Saudi Arabia to ask for another oil production hike.
But a dead end may be in sight: officials from Russia have scorned the idea of a price cap, warning that such a measure would "collapse," and OPEC+ responded to pleas for more oil with a modest 100,000 barrel hike per day starting in September, after filling just 60% of the hike it promised in July, Reuters reported.
"The spare capacity is largely gone," Vigna said of the cartel, estimating that OPEC+ nations had a remaining production capacity of roughly 1 million barrels a day, the smallest in about 20 years.
Between the cartel's low inventory of oil – which led Saudi Arabia to double its Russian crude purchases in June – and Asian buyers snapping up liquid natural gas, Europe is pressed to find other sources of fuel, stirring fears that the continent will tip into a crisis this winter when EU sanctions on Russian oil fully take effect.
Vigna acknowledged though there were "good long-term solutions" for Europe to work towards, such as investing in infrastructure to boost oil production, inking long-term natural gas contracts, and implementing more hydrogen energy use. But those are unlikely to bring relief in time for year-end, experts say. It takes around three to five years for investments to produce more oil supply, according to Exxon Mobil CEO Darren Woods.
"Unfortunately, in the near-term, the market is likely to be tight, and there is no quick easy solution to the energy affordability problem," Vigna warned.
It puts some more pressure on Europe to gear up for winter months ahead. Nations have already implemented laws to curb energy usage and have urged by world leaders to develop a collective emergency plan.