Global Gas Markets Face Prolonged Tightness Through Next Summer
The International Gas Union (IGU) has warned of prolonged tightness in global gas markets through at least next summer, potentially causing demand destruction and higher prices for both Europe and Asia.
Europe is currently outbidding Asian buyers for LNG as it seeks to rebuild gas storage ahead of winter. This has led to a sharp increase in European gas prices, with Goldman Sachs forecasting an average price of around €70/MWh, although prices could fall towards €50/MWh if LNG flows through the Persian Gulf improve.
LNG exports from the Persian Gulf are currently estimated at only 15-25% of pre-war levels, due to the disruption at the Strait of Hormuz limiting supply. The IGU warns that prolonged high prices could lead to more permanent gas demand destruction, while stringent European climate and methane regulations could further affect LNG supply.