Global LNG prices are projected to rise this winter as Europe faces its lowest natural gas storage levels in years, and North Asian buyers encounter increased competition due to the ongoing closure of the Strait of Hormuz. Industry executives at the Gastech conference in Bangkok highlighted that Europe is entering the winter season with storage at only 67% capacity, significantly below the EU’s target of 80% by December. This situation is exacerbated by the war in Iran, which has hindered LNG shipments from Qatar and the UAE, resulting in a loss of 36 million metric tons of supply this year.
Unlike the previous year’s Ukraine crisis, European countries did not significantly build stockpiles over the summer due to a backwardated market, where current prices exceed future prices. Experts warn that if winter temperatures are colder than usual, prices could soar to $40 per million British thermal units, potentially leading to demand destruction. Conversely, if the winter is milder, prices may remain elevated but not significantly higher than current levels.
Executives from companies like Equinor and Cheniere Energy emphasize the challenges ahead, noting that European buyers may have to compete with Asia for U.S. supplies, further complicating the situation.
