Global Gas Market Pricing in Tight Supplies Due to Gulf Disruptions

The global gas market is pricing in tight supplies well beyond winter due to disruptions in Gulf liquefied natural gas (LNG) exports caused by the Iran war. Menelaos Ydreos, secretary general of the International Gas Union (IGU), whose members represent more than 90 percent of the global gas market, said that forward gas prices suggest traders expect elevated prices and supply risks to persist through next summer before easing.

The conflict is affecting multiple regions at the same time, unlike the energy shock that followed Russia's invasion of Ukraine in 2022. Europe is competing with Asia for LNG cargoes while attempting to refill storage sites ahead of winter, amid continued uncertainty over the impact on exports from Qatar, one of the world's largest LNG suppliers.

Ydreos noted that current futures curves indicate markets expect tight conditions to continue into next year, a marked shift from a few months ago when traders expected prices to ease after winter. He added that Europe is starting to outbid Asia because they need to refill storage levels, and that the crisis differs from previous ones due to its global reach.