Europe faces tighter gas market as LNG flows shift toward Asia

Europe’s imports of liquefied natural gas (LNG) are set for a second consecutive monthly decline, as disruptions linked to the Iran war and shifting global demand patterns tighten supply across key markets.

In the first two weeks of May, LNG shipments to Europe continued a downward trend that began in April, according to shiptracking data, Bloomberg reports.  

Imports could fall by more than 1% year-on-year by the end of the month, following a 7% drop in April, according to estimates from data intelligence company Kpler.

The weakening inflows come at a time when gas demand in Europe is expected to rise in May, according to Energy Aspects Ltd. While the decline is less pronounced than in April — and subject to revision as cargoes are often re-routed — it underscores tightening supply conditions as Europe seeks to refill storage ahead of the next winter season.    

“We’re currently seeing an increase in vessel diversions towards Asia, notably driven by resilient demand in South Asian countries,” said Ronald Pinto, principal gas and LNG analyst at Kpler.

Heating demand in parts of Europe has remained elevated at times due to cold snaps in May, while gas use in the power sector has also increased amid maintenance at lignite, coal and biomass plants, according to Energy Aspects analyst Erisa Pasko.

At the same time, LNG shipments to China and other parts of Asia have risen as buyers secure additional spot cargoes, with market participants pointing to disruptions linked to the Middle East conflict and constrained flows through the Strait of Hormuz, where Qatari gas exports face logistical pressure.

Global gas demand initially softened after the outbreak of the war, but Europe may now face higher prices during hotter months, when Asian cooling demand typically peaks and competition for supply intensifies.

Seasonal maintenance at several European regasification terminals has also weighed on LNG imports, further limiting inflows into the region’s gas system.

By Aghakazim Guliyev