Oil use in power generation and industry is “soaring” as high natural gas and electricity prices prompt fuel switching, the International Energy Agency said, Ben writes.

Why it matters: It’s why IEA, in this morning’s latest monthly market report, slightly boosted its global oil demand growth estimate for 2022 despite economic headwinds.

  • “With several regions experiencing blazing heatwaves, the latest data confirm increased oil burn in power generation, especially in Europe and the Middle East but also across Asia,” IEA said.
  • “Fuel switching is also taking place in European industry, including refining.”

The intrigue: Use of oil for electricity had mostly fallen for decades, though it rose last year, and it’s a small source of global power (roughly 3% last year, per the European NGO Ember).

But oil emits more CO2 per unit burned than natural gas, so we’ll see the effect on 2022 emissions when the data’s in.

The big picture: The IEA report takes stock of a market that has loosened in recent months and stockpiles have risen, sending prices mostly lower since mid-June.

  • One reason: “More limited declines in Russian supply than previously forecast.”
  • Still, IEA cautions that another price rally can’t be ruled out due to supply disruption risks.

By Axios