Europe is reportedly running out of gas capacity after the US supplied it with a massive amount of liquefied natural gas amid reduced pipeline and strong demand. The government looked for alternatives because the geopolitical tensions around Ukraine threatened the availability of several taps.
But due to the increase in LNG shipments to Europe, the US overtook Qatar and became the world's largest exporter this early 2022. In January alone, Europe received more than 16 billion cubic meters of US liquefied natural gas. Deliveries are also forecast to remain elevated this month, with more than 6 billion cubic meters shipped since the beginning of February.
To date, it is estimated that two-thirds of US LNG cargoes will be delivered to various European countries. However, storage is running out, which means that soon, shipments from the US will also decline.
The European Union has a limited capacity of LNG receiving terminals. Spain and France have the largest capacity in the EU, followed by the UK. Germany, on the other hand, has no LNG import terminals.
On a different note, OPEC once again failed to meet its planned production targets, exacerbating supply constraints. This drew sharp criticism from the International Energy Agency.
Supply disruptions also remain, in part due to the ongoing geopolitical tensions. And if a war erupts in Ukraine, the West is likely to impose sanctions, which will accordingly lead to a further reduction in oil supplies.
On the bright side, Iran may ramp up exports if the US revives the 2015 nuclear deal. However, that will lower oil prices.
