Global Gas Squeeze Tightens Grip: Europe, Asia Brace for Extended Strain

The world is in for a longer-than-expected natural gas squeeze, likely stretching through next summer and hitting Europe and Asia hard, warns the International Gas Union (IGU). This tough forecast comes as European gas storage levels are far below normal for this time of year, with a key shipping route through the Strait of Hormuz still facing disruptions from ongoing Middle East conflict. The result? Sky-high prices that could force businesses and homes to cut back on gas use for good, a tough situation called 'demand destruction'. Europe, in particular, is wrestling with dangerously low gas storage, sitting at only about 70% full in late September, much less than the average over the last five years. Even a relaxed EU target of 80% by November 1 looks challenging to meet at the current refilling pace. The disruptions in the Strait of Hormuz have drastically cut global Liquefied Natural Gas (LNG) supplies, with QatarEnergy announcing a 'force majeure' that restricts exports. This leaves Europe fighting with Asian buyers for fewer available LNG cargoes, pushing benchmark prices like TTF in Europe and JKM in Asia to very high levels. Looking ahead, Europe faces another big test in January 2027 when a full EU ban on Russian LNG imports takes effect, further tightening supply. Experts predict prices will stay high, with Goldman Sachs forecasting European gas prices to average around €70/MWh for the last part of 2026. This prolonged squeeze could push more industries to switch from natural gas to other fuels like coal, impacting climate goals. Asia is also feeling the pinch, with forecasts showing a continued drop in LNG demand for the second year in a row due to these high prices. How countries manage their energy needs and push for greener alternatives will be crucial to lessen the long-term impact of this global energy challenge.