Global gas supply is likely to stay tighter than it should be until at least next summer, the International Gas Union warns, as the Iran war keeps Gulf LNG exports restricted. Europe is outbidding Asia to refill storage, and Goldman Sachs now expects European gas prices to average about $80 per MWh this winter.
Global gas markets could stay tight until next summer at least, and the squeeze may cause prolonged demand destruction, according to the International Gas Union, an industry association covering 90% of the world's gas producers. The group's secretary general, Menelaos Ydreos, told Reuters this week that the market is pricing in a prolonged conflict in the Middle East.
Europe outbids Asia to refill storage
According to Ydreos: "Europe is starting to outbid Asia because they need to refill storage levels." He added that the price surge has already destroyed some gas demand, though it remains unclear whether the dip is temporary or could turn into permanent destruction. A recent report from Global Energy Monitor found that Southeast Asian countries are still building gas-fired power plants despite the price inflation, suggesting the demand hit may prove temporary rather than structural.
Goldman sees European prices near $80 per MWh
Goldman Sachs expects European gas prices could drop from around 70 euro per MWh to 50 euro per MWh if LNG flows out of the Persian Gulf improve. Yet the bank still expects prices to average 70 euro per MWh, equal to roughly $80, this winter — up from an earlier estimate of 30 to 60 euro per MWh. Goldman's Samantha Dart noted that Gulf LNG exports remain at an estimated 15% to 25% of pre-war levels, adding that demand left unmet elsewhere would flow to Europe instead.
Coal use climbs as gas turns unaffordable
Power generators are already switching back to coal, a sign that gas is becoming harder to afford for one of the world's largest import regions. Reuters reported that European coal consumption by utilities could rise as much as 25% over the next six months. Gas prices are surging to their highest level in three years this month, hitting 80 euros per MWh. Over the 30 days to September 24, European benchmark gas prices added more than 17%, according to EnergyRiskIQ data.
Russian LNG ban adds a twist for Asia
Some relief could still reach Asian importers. The European Union has already approved a ban on Russian LNG imports that takes effect in January, which would redirect flows from Yamal LNG toward Asian buyers, possibly at a discount. That would tighten supply further for Europe, but the bloc's leadership has said its geopolitical priorities come first. Ydreos also warned that regulations pushed too far would make compliance difficult for suppliers — a remark that may point to the EU's methane rule, which has already drawn pushback from both Qatar and the United States.
Source: Oilprice.com
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