Gas prices in Europe fell by almost 60% in 2023 from their peak in 2022, and they continue to decline mainly due to record gas reserves and renewable energy sources, Bloomberg reported.
Despite the escalation of the Palestinian-Israeli conflict in October last year, and the associated disruptions to international supply via the Red Sea, LNG prices in Europe continue to fall. Bloomberg attributed the occurrence to record gas reserves, broad investment in renewable energy, and slow economic growth, which limits energy demand in large industrialized countries.
However, there is a risk that the decrease will end and European countries, as well as Japan, the United States, and China, may face another crisis.
"Just by looking at prices, it seems that the crisis is over," Bloomberg quoted Balint Koncz, head of gas trading at MET International in Switzerland. "However, we are now reliant on global factors, which can change rapidly."
Despite large international investments in the creation of LNG transits, most of the new capacity will not appear until 2025 and 2026. And the agreement on the transit line supplying gas from Russia through Ukraine to the countries of Western and Central Europe expires at the end of 2024, with no information on its extension. Closing the transit line will reduce gas supplies. In addition, increasing extreme weather events are straining energy systems and could increase demand for LNG.
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