All eyes on LNG demand as gas prices recede

“Iran shock exposes LNG demand weakness”

A market shock can be a litmus test of underlying supply & demand balance.

Last week we got to observe a market shock test in both the crude & LNG markets, as a result of the Iranian conflict.  Prices in both markets shrugged off the shock within a week.

In an update of the chart we showed in last week’s article, Chart 1 shows key gas & oil price benchmarks falling faster than they rose as Middle Eastern risk premiums deflate and supply & demand balance comes firmly back into focus.

Soft LNG demand a key driver

In 2024, a recovery in Asian LNG demand was a key driver of tightening LNG & European gas markets and higher gas prices.

TTF & JKM prices remained supported across Winter 2024-25 by colder weather and the requirement to replenish rapidly depleting European underground storage stocks.

However LNG demand has softened into 2025. Asian LNG demand, the engine room of global demand growth, has not been firing on all cylinders in 2025 as shown in Chart 2.  Soft Chinese LNG demand is the main driver.

The dynamics of Asian LNG demand from here to 2030 is the most important variable in determining how the LNG market will absorb more than 200 mtpa of new supply.

3 scenarios to frame market evolution

If you are interested in a deeper dive into how the LNG & European gas markets will evolve across the next 5 years, we have a webinar this Wed (2^nd Jul).

We will cover:

• Macro drivers of gas market uncertainty as 200 mtpa of new supply wave looms
• 3 scenario framework to navigate LNG & gas market evolution
• Supply & demand curve framework to shed light on pricing dynamics
• How demand is key to shaping market evolution & price formation
• Commercial & portfolio value implications of different market paths.

Time & access: Wed 2nd July 10:00-10:30 CET (09:00-09:30 BST)

Registration: Pre-registration required (access is free); webinar registration link – register here