A new gas shock builds in Europe

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Progress towards peace in Ukraine is slow to the point of being imperceptible. 

Worse, European gas inventories are sharply depleted after a cold winter. ANZ.


Europe faces challenges restocking its stores of liquid natural gas following sharp drawdowns over winter.

This is likely to increase pressure on the global LNG market.

Increasingly tight supplies resulted in a drop in Europe’s overall gas storage levels.

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The expiration of the gas pipeline deal between Russia and Ukraine cut more than 5% of Europe’s gas supply.

This has left Europe in a precarious position. Storage levels are likely to fall below 30% by April, significantly below historical levels.

This makes it almost impossible for Europe to meet its mandated storage target of 90% by 1 November.

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With little prospect of a return of Russian pipeline gas, European Union (EU) member states are increasingly reliant on the LNG market.

Restocking will be complicated by challenging geopolitics.

Recent US sanctions on Russian LNG have constrained supply, and US tariffs on Chinese goods risk initiating retaliatory levies or sanctions.

We see upward pressure on North Asian LNG prices.

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Supply-demand fundamentals suggest tightness will emerge as European and Asian buyers ompete for limited cargo supply.

With Europe’s gas inventories likely to remain below targets, we expect its LNG demand to remain high through the 2025-26 winter.


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Goldman has soured as well.


Of all Russian gas flow scenarios we’ve discussed in recent notes, we’ve thought of the scenario of only a partial return of flows through Ukraine (40-80mcm/d through the Sudzha transit) as the most likely one.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.