Gas prices to remain high until 2025

The gas market has progressively rebalanced in 2023, following a year of high tensions stemming from the Russian invasion of Ukraine. In December 2023, gas prices recorded year-on-year declines of 68% in the United States, 54% in Europe and 39% in Asia. Despite this overall decline, gas market volatility remains high and prices are still well above their historical averages in both Asia and Europe.

According to the latest report released by Crédito y Caución, gas prices will remain high until the middle of this decade, as world gas markets continue to adjust to the loss of Russian pipeline gas supplies to Europe.

This will impact prices in other importing regions, although the effects in Asia will be mitigated by the linkage to oil prices of many long-term contracts. After 2025, improved liquefied natural gas transportation capacities will reshape the gas market, reducing prices in major regions.

Crédito y Caución expects global gas demand to peak in the next few years and begin to decline in the second half of the 2020s. According to the projections included in the report, in a baseline scenario that takes into account only the commitments already announced, global gas demand will fall by 7% in 2030 and by 42% in 2050 compared to current levels.

Projections for Europe in this reference scenario put the reduction at 28% by 2030. In a scenario of net-zero emissions by 2050, the overall decline would reach 78% by 2050.

The share of gas in the energy mix will decline as renewables gain market share, but less than that of oil. China, India and the Middle East will remain the main sources of demand growth in the coming decades, while Europe, Japan and the United States will see a contraction in demand.

On the supply side, the United States is currently the world's largest supplier of natural gas, followed by Russia and Iran. In the reference scenario, Russia is expected to be the largest supplier in 2050, followed by the United States and Qatar.