Europe and Asia compete for limited LNG supply as war continues

As the war in the Middle East stretches on, Asian and European countries are vying for a limited supply of natural gas. Pressure is increasing, with a fifth or so of global liquified natural gas supply taken off the market since the war broke out.

The longer the war continues, the more disruptive it will be to the European and Asian countries that import LNG, per Jamison Cocklin, managing editor with Natural Gas Intelligence.

“You've had such a big chunk of supply taken out,” he said. “You're probably going to start to see things get pretty rough here by the end of the month — April, May. That's when competition really starts to intensify.”

While Asia has been disproportionately affected by the loss of natural gas, “this is a very interconnected global market,” said Lindsay Schneider, principal consultant and analyst at RBN Energy.

So, Asia is now buying LNG that would have been going to Europe, while Europe is trying to refill natural gas inventories it depleted over the winter.

“They need to refill that storage so that they don't start next winter in this precarious position,” Schneider said.

Eventually, if the war continues, something's got to give, said Laurent Ruseckas, research and analysis executive director at S&P Global Energy.

“One way or another, demand has to come down to meet the available supply,” he said.

And that would take the form of high prices — prices so high that for poorer countries in Asia, “it may not simply make sense to buy that gas, it may not work in terms of the economics,” Ruseckas said.

Wealthier countries in Europe and Northeast Asia, he added, are better situated for higher-priced LNG.