Hot and dry weather associated with the El Niño phenomenon can intensify fluctuations in gas and liquefied natural gas (LNG) prices. Increased demand for cooling, especially in several Asian countries, along with reduced hydropower generation in some states, is driving a greater need for additional gas and LNG supplies for electricity production at gas-fired power plants.

Currently, gas storage levels in European facilities are below 50%. It is expected that European buyers, who have not yet ramped up their purchases, will eventually enter the market to replenish reserves. This could lead to competition between European and Asian buyers, potentially causing further price volatility for gas and LNG, particularly this year.

The restoration of LNG production in Qatar, despite positive trends in resolving the conflict between the US and Iran, may take two to three months. Full recovery of Qatar’s production capacity will significantly impact future gas and LNG prices. In the event of a prolonged conflict and delays in restoring production in Qatar, high gas and LNG prices could persist until 2027.

Industry events highlight the importance of diversifying gas and LNG supply sources to ensure energy security. However, alternative supply options are limited, as most new projects are concentrated along the US Gulf Coast. Despite buyers’ efforts to support projects in other regions, such as Abadi LNG in Indonesia and Argentina LNG, US supplies remain significant. Forecasts suggest that by 2035, more than one-third of supplies will come from Gulf Coast projects.

Looking ahead, Asia—especially Southeast and South Asia—will be the main driver of LNG demand growth. Economic and population growth, along with declining domestic resources and gas production in these regions, are fueling demand for gas and LNG. Demand growth prospects in these areas are expected to be substantial and may surpass those of China.

In China, gas and LNG demand growth may be limited by the launch of the “Power of Siberia 2” pipeline, which will provide Russian gas supplies. Projections indicate that gas demand in China will continue to grow over the next five to ten years, possibly until the early or mid-2030s, after which growth rates may slow. LNG demand in China is expected to stabilize after 2033–2034, taking into account national decarbonization initiatives. Additionally, China is actively increasing its own resource production, including both conventional and unconventional gas, which could also slow the overall growth in gas and LNG demand in the country.