Oil prices are pulling back on an explosive dollar and recession fears even as the International Energy Agency (IEA) declares that we are going through the worst energy crisis in the history of the world, suggests Phil Flynn of PRICE Futures Group.

That’s right, the same International Energy Agency that just a couple of years ago told the world to stop investing in fossil fuels is now bemoaning the fact that under-investment in fossil fuels has created not only war in Europe but a crisis, unlike anything the world has ever seen.

At the Sydney Energy Forum (SEF) the IEA executive director Fatih Birol blamed the energy crisis on Russia’s invasion of Ukraine. He says it has had a larger impact on energy supplies than the oil crises in the 1970s. Argus Media reported that Mr. Birol said, “We are in the middle of the first global energy crisis. The world has never witnessed such an energy crisis in terms of its depth and consequences. It is interwoven by many factors including geopolitics, and I believe we may not have seen the worst of it yet. This winter in Europe will be very, very difficult.”

Yet while he blamed Russia for all the world woes on Energy, he failed to take responsibility for the IEA’s part in allowing Europe to become vulnerable to this energy price shock. The IEA has actively promoted a pullback in investment in fossil fuels and failed to flag as a risk Europe’s growing dependence on Russia as a supplier of oil and gas. Instead, he seemed to tout the green energy mistakes. Birol said, “We are going to see some tension in some countries on how they are going to align their national energy security demands with climate demand, but countries should not lock in large-scale fossil fuel investments,” Birol said.

In the meantime, we have to deal with the green new deal recession. The dollar is rallying as the euro falls back close to parity. With the dollar raising concerns about the European economy and how deep and long this energy-related recession is going to last, the strength in the dollar has caused a risk-off across the commodity complex. Oil is getting beat up not only on concerns about weak demand but also due to concerns about the strength of the dollar.

We’ll also get the first look at the American Petroleum Institute report tonight and we know that crude oil supplies may increase because of a 6.9-million-barrel release from the strategic petroleum reserve last week. There will be a focus on gasoline and diesel supplies as the market wants to get a sense of how strong demand was over the fourth of July holiday weekend.

Natural gas on the other hand is breaking out to the upside. Not only is it be supported by European prices but the potential for a heat dome.

This week, we’ll see more data directly related to inflation and economic growth. All eyes will be on the CPI and PPI, both of which recently ticked up to 40-year highs. The talk of “peak inflation” continues to make the rounds, but there is little evidence yet to support this thesis. Retail sales were disappointing in May and point to a softer economy. If June confirms that weakness, there will most likely be downgrades in economic growth. On a positive note, the jobs report was strong.

Traders have much to consider, but just keep in mind that the Fed’s only job right now is to do as much as possible to reduce inflation. That may mean more rate hikes than anyone could imagine, and it will be interesting to see how the markets respond.

Learn more about Phil Flynn by visiting Price Futures Group.