Global Gas Shortage Forecasted to Last Until Summer 2027

The global natural gas market is facing a prolonged shortage that could last until summer 2027 due to reduced exports of liquefied natural gas from the Persian Gulf amid Iran's war with the United States and Israel.

According to International Gas Union Secretary General Menelaos Ydreos, the conflict is expected to drag on, causing Europe to outbid Asian LNG buyers for available supplies. This has led to higher gas prices in Europe, which have already caused demand to decline, although it remains unclear whether this effect will be temporary.

Goldman Sachs estimates that European prices could fall from around €70 to €50 per MWh if LNG supplies from the Persian Gulf resume, but without an improvement in supplies through the Strait of Hormuz, European buyers will have to offer higher prices to compete with other importers for available LNG cargoes. As a result, some European electricity producers are switching to coal, which could increase coal consumption by 25% over the next six months.