Global Commodities: Running the Numbers on Gas

The ongoing Middle‑East conflict has tightened global gas flows. The Strait of Hormuz, briefly reopened, is now closed again, leaving only one LNG vessel observed in transit and 16 cargos stranded. Qatar, the world’s largest LNG exporter, has managed to restart three of its north‑side trains, delivering roughly 10 million tonnes per annum—about 14 % of its total capacity. Industry estimates suggest a two‑to‑three‑month ramp‑up to reach 80 % utilization, meaning market relief will be gradual rather than immediate.

U.S. gas exports have stepped in, covering roughly half of the Qatari shortfall, while Malaysia, Africa and limited Australian cargoes add another 20‑30 mcm daily. The remaining 170‑180 mcm per day gap is being absorbed by demand destruction, especially in Asia where spot prices have surged. Higher gas elasticity has prompted a swift shift to coal, whose inventories are now 20‑25 % above 2022 levels in the United States and seven‑fold higher in China. This coal cushion dampens price spikes and keeps European gas prices from matching the 2022 rally.

JPMorgan projects European gas prices to settle between €55 and €60 per MWh through Q2 and Q3, rising further into the winter injection season. The price band is intended to make gas‑to‑coal substitution economically unattractive in Europe while curbing Asian demand where cheaper coal remains abundant. Flexibility in the European power system—about 10 billion cubic metres—allows short‑term swaps, but sustained higher gas pricing is essential to refill storages to 80 % before winter. Investors should watch inventory builds, carbon price trends, and any unexpected reopening of Hormuz for potential market relief.