Global Gas Squeeze Could Last Through Next Summer

The International Gas Union (IGU) told Reuters that global natural gas supplies are likely to remain unusually tight through at least next summer, a condition that could trigger extended demand destruction. IGU secretary general Menelaos Ydreos said market participants anticipate a prolonged conflict-related disruption, and noted Europe has begun outbidding Asian buyers to refill storage ahead of the heating season. Despite short-term reductions in consumption tied to high prices, some indicators suggest longer-term demand in Asia may persist. A Global Energy Monitor report cited in the coverage found Southeast Asian countries are still constructing gas-fired power plants and expanding LNG import capacity even after the price spikes following the Middle East conflict. Investment bank Goldman Sachs offered a more optimistic short-term outlook for Europe in a separate note, saying improved LNG flows from the Persian Gulf could lower spot prices from roughly €70/MWh to about €50/MWh under a favorable scenario. Nonetheless, Goldman still projects an average of about €70/MWh for the winter, and its analysts warned that limited exports through the Strait of Hormuz would require higher European prices to outbid other importers for cargoes. Market responses are already visible in fuel choices and trade adjustments. Reuters reporting cited by the story indicates European power generators are shifting back toward coal, with coal-fired power consumption by utilities potentially rising as much as 25% over the next six months amid multi-year high gas prices. Separately, the EU’s forthcoming ban on Russian LNG imports could redirect cargoes to Asia, where Russian volumes may be offered at a discount, tightening supply for Europe but aligning with the bloc’s stated geopolitical objectives. Regulatory tensions add another layer of uncertainty for supply. The IGU warned that stringent emissions-linked rules could prompt some suppliers to sell to regions with less demanding standards. The article noted that two major LNG exporters have pushed back against an EU proposal requiring traceability for methane emissions, and that if Qatar’s exports are constrained, the United States would remain a central source of LNG for Europe regardless of higher costs or regulatory adjustments.