The gas market in Europe is undergoing a significant transformation, marked by geopolitical factors that threaten to destabilize the supply and increase costs. According to Diego Mateos, an energy expert and CEO of GESE, two main elements are triggering this crisis: Iran’s involvement in the Middle East conflict and the decision not to renew the authorizations of the Ukrainian gas pipeline.
Iran’s incursion into the conflict poses serious repercussions for the global gas supply, especially regarding Liquefied Natural Gas (LNG). The Strait of Hormuz, a crucial route through which around 25% of the world’s LNG passes, becomes a focal point. Any disruption in this route would deeply impact gas exports, primarily from Qatar, one of the leading global suppliers.
The geopolitical tension has also affected Iran’s domestic gas production, already limited by international sanctions. Despite having the second-largest gas reserves in the world, an escalation in the conflict could further reduce Iranian production, impacting countries like Turkey and Iraq, which depend on this resource. This would increase global competition for LNG, thus putting pressure on prices in Europe and Asia.
Europe, which has been facing an energy crisis since the Russian invasion of Ukraine in 2022, could suffer some of the worst consequences. The decrease in Russian gas exports has increased its reliance on LNG. Any disruption in supply from the Middle East, combined with greater competition with Asia, could lead to significant price increases, especially in winter when energy demand is highest.
The decision not to renew the authorizations of the Ukrainian gas pipeline, crucial for Russian gas supply to Europe, further complicates the scenario. This forces European countries to rely more on imported LNG, mainly from the United States. This modification in the energy infrastructure implies additional costs related to the transportation and storage of LNG compared to pipeline gas.
Mateos suggests that this situation could accelerate Europe’s transition to renewable energy sources. In the long run, this crisis could be a catalyst for the development of clean infrastructures and foster closer cooperation between European countries to ensure their energy supply.
The role of the United States in this scenario is also relevant. After the 2022 energy crisis, the United States has become the world’s largest exporter of LNG, improving its position in the global gas market and using this resource as a tool of geopolitical influence. Europe’s dependence on American LNG has strengthened transatlantic relations, in an effort to diversify their energy sources and reduce their reliance on Russian gas.
Looking ahead, Mateos anticipates that the European and global gas market will continue to be volatile. The ability to export large volumes of LNG by the United States has helped control some price spikes, but the long-term outlook remains uncertain. Market volatility will be strongly linked to global demand and geopolitical tensions. Europe faces an unpredictable energy environment and must prepare to address these imminent challenges in terms of energy security and price fluctuations. The transition to renewable energies emerges as a viable long-term option to mitigate these risks and reduce gas dependency.
Source: MiMub in Spanish
