Natural gas markets are on course to return to balance in the third quarter of the year as the Strait of Hormuz reopens, the head of the Gas Exporting Countries Forum has said.
“If we assume that the Strait (of Hormuz) is now open and will remain open, our view is actually that in the course of this next quarter we will begin to see some re-stabilization in the market,” Philip Mshelbila said at the Reuters Global Energy Forum, as quoted by the publication. The GECF groups producer countries accounting for as much as 70% of global natural gas resources.
The Middle East war disrupted a sizable portion of global liquefied natural gas flows as Iran struck its Persian Gulf neighbors in retaliation for U.S. and Israeli strikes on its own energy infrastructure. Qatar suffered substantial damage to its LNG hub, Ras Laffan, resulting in production outages that, coupled with the Hormuz blockade, prompted the country to declare force majeure on LNG exports.
Earlier this week, however, the prime minister of Qatar said LNG production will return to normal, except for the damaged facilities, within a few weeks. This will help the rebalancing of global natural gas markets, with the GECF’s chief expecting gas flows to reach their pre-war levels in the final quarter of the year, dragging prices down.
The war between the United States, Israel, and Iran pushed natural gas to its highest level since 2022, causing pain especially in Europe, which has become strongly dependent on liquefied natural gas after the loss of Russian pipeline flows. While the continent’s biggest LNG supplier is the United States, Europe is also buying significant volumes of Qatari gas, and the disruption in the Gulf had an adverse effect on supply. The price surge resulting from the crisis, meanwhile, made U.S. LNG more expensive as well.
By Irina Slav for Oilprice.com
