Iran Conflict Drives Prolonged Gas Market Tightness
The global gas market is pricing in prolonged tightness due to the ongoing conflict in Iran. According to Menelaos Ydreos, secretary general of the International Gas Union (IGU), traders expect elevated prices and supply risks to persist through next summer before easing.
Forward gas prices suggest that markets expect tight conditions to continue into 2027, a marked shift from a few months ago when traders expected prices to ease after winter. This is due to the conflict disrupting Gulf liquefied natural gas exports and complicating Europe's efforts to rebuild gas inventories.
The current crisis differs from the energy shock that followed Russia's invasion of Ukraine in 2022 because it is affecting multiple regions at the same time, said Ydreos. European policymakers are also wrestling with how to balance climate goals with energy security and affordability, adding to the uncertainty surrounding gas supplies.