According to the forecasts of analysts and traders, EU countries may experience disruptions in gas supplies in the winter due to high competition with Asian countries for LNG supplies.
Points of attention
- High competition with Asian countries for LNG supplies may lead to disruptions in gas supplies to EU countries in winter.
- The uncertainty surrounding future weather patterns and the expiration of the gas transit contract between Russia and Ukraine pose risks for gas supplies to Europe.
- Tensions in the Middle East and the potential closure of the Strait of Hormuz could threaten the stability of LNG supplies to the EU.
- European countries are raising LNG prices to compete for supplies, which might result in market instability and increased gas prices.
- If gas withdrawals this winter exceed those of the past years, EU buyers may need to enhance their competitiveness in LNG markets to replenish supplies, potentially causing a rise in wholesale gas prices.
What is known about the probable threat of disruptions in gas supplies to the EU
According to the publication, the European gas market has now become dependent on unstable global energy markets after refusing to buy Russian gas.
In particular, liquefied gas is in high demand among many countries in the world and has a limited supply.
Deliveries are mostly made to the highest bidder. Under these conditions, EU countries compete with Asian countries and raise prices to obtain LNG.
Before the onset of winter, competition between EU countries and Asian countries is increasing.
How EU countries managed to get through the past 2 winters with record gas reserves
However, the past 2 winters have been relatively warm, allowing European countries to go through the winter with record gas reserves in storage.
Currently, market participants fear that the coming winter will not be so warm. The situation is also complicated by the expiration of the gas transit contract between Russia and Ukraine on December 31.
In addition, the mass media assume that Europe will be forced to supply gas to Ukraine as part of assistance during the heating season.
Concerns about stable LNG supplies to European countries also arise from tensions in the Middle East that could escalate to the closure of the Strait of Hormuz, putting 1/5 of the world's LNG supplies at risk.