Regional war expected to wipe 150 bn cbm off LNG supply through 2030, keeping the market tight into 2027

The regional war is expected to wipe 150 bn cbm off global LNG supply between 2026 and 2030, equivalent to 15% of the new liquefaction capacity expected to come online over that period, the International Energy Agency (IEA) said on Tuesday in its Global Gas Security Review (pdf). Most of the losses will come in 2026 and 2027, delaying the wave of new supply that was expected to ease a tight global gas market. Global LNG supply is on track to fall 3%, or nearly 20 bn cbm, this year — its biggest annual decline on record.

That’s a reversal from where the agency started the year. In January, the IEA expected a sharp rise in LNG supply to ease market fundamentals in 2026. Falling demand is what has kept the market from going short, because consumption is set to fall faster than supply this year, by our read. Global gas consumption is expected to fall around 1.5% this year, marking its third annual decline since 2020, according to the IEA. Demand in Asia Pacific is forecast to drop 1.5% as higher LNG prices push power producers toward coal, while Europe is expected to see a 3% decline as industrial consumers cut back. In the Middle East, damage to production and processing facilities is expected to drive a 10% drop in consumption. Higher prices have also priced some buyers out of the spot market altogether. Pakistan, for example, twice rejected a September LNG cargo priced at nearly USD 27 / mmBtu.

And reopening the Strait of Hormuz won’t bring Gulf LNG supply back to pre-war levels overnight. Missile strikes in March damaged two production trains at Qatar’s Ras Laffan facility, taking 12.8 mn tons of annual capacity offline, or roughly 17% of the country’s total. QatarEnergy’s latest assessment, cited by the IEA, is that it could take three years to restore operations — a cumulative loss of more than 50 bn cbm of LNG supply. The first train of its North Field East expansion is now expected to come online in the first half of 2027, a delay from its previous end-2026 target. Meanwhile, the four LNG liquefaction projects that reached final investment decisions since March, all in North America, won’t start production until 2030 at the earliest.

Europe could be competing for significantly more LNG next summer. EU gas storage stood at 75% at the end of October, below the bloc’s 80% minimum fill target, itself a derogation from the regulation’s 90% and its lowest level since 2013, according to the IEA. The agency estimates the EU would need to inject 57-83 bn cbm next summer to bring storage back to average levels by November 2027, compared with a five-year average of 50 bn cbm. The market is already reflecting that pressure, with May 2027 contracts trading above those for November 2027 and the spread recently hitting a record high, Bloomberg reports. That reverses the usual seasonal pricing pattern, where summer gas trades at a markdown to winter.

Egypt, meanwhile, is becoming increasingly exposed to the LNG market. The country’s LNG imports rose 70% y-o-y, or 6.5 bn cbm, in January-October, with net imports exceeding domestic gas production for the first time in July. Tenders signed before the war helped Egypt avoid the worst of the summer price increases, but that protection was expected to fade toward year-end, Kpler’s JP Lacouture told EnterpriseAM in September.

The higher prices are now starting to bite. The government has asked suppliers to defer five of the 15 LNG cargoes scheduled for November after the cost per shipment rose above USD 100 mn, roughly twice what it was in September, Asharq Business reports, citing an unnamed government official. Gas allocations to fertilizer and methanol plants have also been cut by 20% since Monday, 2 November, according to Asharq. Egypt had already budgeted for a 26% increase in its gas import bill to USD 10.7 bn this fiscal year.

OUR TAKE- The LNG supply glut expected this year is looking increasingly unlikely, with the market now facing tighter conditions well into 2027. More supply was supposed to give importers some breathing room on prices, particularly those able to hold off on purchases. But with the IEA now expecting a longer supply shortfall and Europe likely to need more LNG to refill storage next summer, waiting carries considerably more risk. Some buyers are already responding by cutting consumption, whether through switching to coal in Asia or reducing industrial gas allocations in Egypt. Deferring cargoes, however, leaves the demand in place and shifts the purchase to a later date, when competition for supply could be just as intense. For import-dependent countries such as Egypt, securing contracted volumes ahead of next summer could offer more protection than relying on the spot market once European buyers return.

MARKETS THIS MORNING-

Seoul falls on AI jitters: South Korea’s Kospi opened -2.5% yesterday and kept falling through the session to close -3.6% down, dragged down by tech stocks as investors remain worried that AI spending is growing too fast. Japanese markets, including the Nikkei 225, were closed yesterday for the Culture Day national holiday.

THE CLOSING BELL-

The EGX30 rose 1.8% at yesterday’s close on turnover of EGP 7.5 bn (32.6% below the 90-day average). International investors were the sole net buyers. The index is up 17.8% YTD.

In the green: Orascom Development (+6.8%), Palm Hills Developments (+6.8%), and Eastern Company (+6.1%).

In the red: Abu Qir Fertilizers (-3.6%), Mopco (-3.0%), and Valmore Holding -EGP (-2.5%).