Fuel supply: global gas prices may rise by 50% in summer%
The Middle East conflict and the abnormal heat wave in the Asian region and Europe may become the causes of a new global gas crisis. In addition to reducing the supply of raw materials due to the closure of the Strait of Hormuz, the weather may affect the situation - meteorologists expect temperature records on the continent. Today, the global energy sector is repeating the situation of 2021-2022, a number of experts believe. In this regard, they predict a new round of price growth. According to their forecasts, the cost of gas may increase by 50% by August. And in the winter of 2026/2027, it may grow to $1-2 thousand per 1 thousand cubic meters. m. What fuel prices to expect this year and how the situation will affect Russian exporters is in the Izvestia article.
What will summer bring to the gas market?
Meteorologists warn of an impending heat wave, which could become a real challenge for the global gas market. According to Meteo Balkans, prolonged heat waves and record high temperatures are expected this summer. The most difficult situation is predicted in the countries of Central, Southern and Eastern Europe, where the indicators may significantly exceed the climatic norm. In some regions, it can reach record values above 40 degrees.
In addition, according to Atmospheric G2, cited by Bloomberg, the average temperature in Japan may rise by 1.5 degrees above normal, in South Korea and much of China — within 0.5–1 degrees. According to the agency, the southern and southwestern provinces of China are highly likely to encounter temperatures in the top 20 historical records. Among the causes of such weather anomalies is the phenomenon of "super El Nino". It originates in the Pacific Ocean and affects the global circulation of the atmosphere.
Experts believe that the abnormal heat will lead to an increase in electricity consumption, primarily due to the increased load on air conditioning systems.
— The specific level depends primarily on the temperature conditions. Therefore, demand will be higher in summer than in spring (during the off-season). Currently, the supply volume is the constraint for it — the global market has lost about 10% of export volumes due to the conflict in the Middle East," said Alexander Frolov, Deputy Director General of the Institute of National Energy.
According to Ekaterina Kosareva, managing partner of VMT Consult, the load on gas generation may increase due to a decrease in water levels in reservoirs and, consequently, the generation of electricity by hydroelectric power plants (HPPs).
How will increased demand affect prices
Price dynamics will depend on several factors at once: temperature conditions, wind speed and, accordingly, the volume of electricity generated by wind turbines, the availability of alternative fuels for power plants, primarily coal, as well as the development of the situation around the Strait of Hormuz, Alexander Frolov added.
According to Sergey Tereshkin, CEO of Open Oil Market, before the crisis began, about a quarter of Qatar's LNG exports, whose supplies were most affected by the conflict in the Persian Gulf, accounted for China. At the same time, liquefied natural gas provides about half of China's total natural gas imports.
In Europe, the share of Qatari LNG before the escalation of the situation in the Middle East was less than 10% of total gas imports, the expert added. At the same time, EU countries have been actively increasing LNG purchases from the United States, where new production facilities have been introduced in recent years.
According to Ekaterina Kosareva, if the conflict drags on and gas supplies from the Middle East do not recover, then competition for natural gas in the global market will increase against the background of the heat wave. In this case, prices may rise by 30-50% by the end of summer.
The dynamics of filling underground storage facilities (UGS) will be a significant factor for Europe, Alexander Frolov emphasized.
— Now many players are extremely reluctant to pump gas, hoping that it will soon become cheaper. But if the situation in the Middle East does not return to normal, Europe will have to forcefully pump it in the remaining months, which will create additional pressure on prices even if supplies are restored. And then the question arises to what level it will be decided to fill the UGS," the expert noted.
According to Gas Infrastructure Europe (GIE), Europe's underground storage facilities are now 38.2% full compared to 46% a year earlier, containing 41.8 billion cubic meters. m. Supplies of natural gas to the European Union dropped sharply in the second half of May. According to GIE, LNG imports over the past week amounted to 358 million cubic meters. m per day is the lowest figure since the summer of 2025.
Market participants attribute the reduction in supplies to the consequences of the conflict over Iran and the suspension of exports from the Persian Gulf countries. If in March the volume of supplies was 431 million cubic meters, in April — 414 million, then in May the figure decreased to 381 million cubic meters.
According to Alexander Frolov, the global energy sector today largely repeats the situation in the summer of 2021, when the prerequisites for a sharp increase in gas prices in 2021-2022 were formed.
— If you look at gas prices in the EU, they are approximately at the level of the end of August 2021. We are still at the beginning of the energy crisis. If the factors that brought us to this point are not eliminated, then the main problems will begin in the second half of the year. And in the winter of 2026/2027, we can see $1-2 thousand per 1,000 cubic meters," said Alexander Frolov.
As of May 26, the cost of gas in Europe (TTF hub) is $570 per 1,000 cubic meters. The increase since the beginning of the year has been about 60%.
What awaits Russian gas exporters
Technically, pipeline supplies from Russia are at a level close to the maximum, Alexander Frolov believes. In his opinion, theoretically, Russia could increase LNG exports by several billion cubic meters. According to the Center for Price Indices, exports of pipeline gas by the end of 2025 amounted to about 114 billion cubic meters, and LNG — about 44 billion cubic meters.
At the same time, according to Sergey Tereshkin, currently the potential for increasing the cost of Russian projects is quite limited. According to him, deliveries from the Sakhalin-2 plant to East Asian countries are mainly carried out under long-term contracts. The products of Arctic LNG-2, as well as enterprises of the Leningrad Region — Cryogaz-Vysotsk and KSPG-Portovaya — are sent to the Beihai terminal in southern China, however, under conditions of external restrictions, suppliers cannot fully influence pricing. In addition, gas from Yamal LNG is exported to EU countries, where sanctions restrictions on supplies under short-term contracts have already begun to apply, the analyst noted.
The EU Council has finally approved a complete ban on the supply of Russian LNG to the EU from January 1, 2027, and pipeline gas from September 30, 2027. At the same time, the ban on LNG imports under short-term contracts begins to take effect on April 25, 2026, and such pipeline supply contracts must be completed by June 17, 2026.
However, as Ekaterina Kosareva reminded, if this year there is a repeat of the price record scenario of 2021-2022, then Europe may temporarily lift restrictions. According to her, according to the regulations, any European country can waive the ban on the import of Russian gas if it declares an emergency situation due to a shortage of this fuel.
In this case, Russia will be able to increase the supply of pipeline gas under short—term contracts - there is an infrastructure for this, as Russian officials have repeatedly said, the expert concluded.
Переведено сервисом «Яндекс Переводчик»
