IGU Executive: Iran War has caused global gas prices to be tightened due to the prolonged Iran war

A top executive in the industry said that global gas markets will continue to 'pricing out' tight supplies despite the fact that winter is still a long way off. The Iran war has disrupted Gulf liquefied gas exports, and Europe’s efforts to rebuild its gas stocks have been complicated by this.

As Europe competes against Asia to secure LNG cargoes, it is also trying to fill up storage facilities ahead of the winter. There are still concerns about the impact of the conflict on Qatar's exports, which is one of the largest LNG suppliers in the world.

According to Menelaos Idreos (secretary general of the International Gas Union, IGU), which represents more than 90% the global gas market, traders are expecting elevated gas prices to continue through the summer of next year before they ease.

Ydreos said that the market is currently stating that it sees the conflict as continuing.

He said that current futures curves show markets expecting tight conditions to persist?into the next year. This is a significant?shift compared to a few months back when traders were expecting prices to ease up after winter.

"Europe is beginning to outbid Asia, because they need to replenish storage levels," Ydreos added. He also noted that this crisis is different from the energy shock following Russia's invasion in Ukraine in 2022, because it affects multiple regions simultaneously.

There is some short-term destruction of demand. "The question is whether the economy will rebound after all has settled or if there are any longer-term policy implications," Ydreos stated.

The European Union's plan to ban Russian LNG imports in January has added a layer of uncertainty.

Russian cargoes currently heading to Europe would find other buyers at potentially lower prices. But any disruption in these flows would put further pressure on a?market that is already struggling with concerns about Middle East supply.

He said that European policymakers are also'struggling with how to strike a balance between climate goals and energy security, affordability,' adding that the European Commission'should consider easing up on some implementation requirements, while maintaining?emission-reduction targets.

He said: "We are for regulations but they must be achievable, practical, and encourage compliance." "If the regulations are too strict and make it difficult for industry to comply with them, they will look to other regions to sell their products."

(source: Reuters)