Unseasonably low European gas demand has so far played an important role in mitigating the immediate impact of the closure of the strait of Hormuz on global market balances.
Since the start of March (and the start of the closure of the Strait of Hormuz), European apparent demand has been 14% below seasonal expectations. This translates in a reduction in demand of 2.5 Bcm compared to what could have been expected. This is enough to offset 8 days of the ongoing stop in Qatari and Emirati LNG exports on global market balances.
The impact is however even larger when compared to demand trends in the first two months of the year. January and February saw, on average, European apparent demand 7% above seasonal expectations. If we compared European demand since 1st March to a scenario in which this trend continued, the reduction increases to 3.9 Bcm. This is equivalent to 12 days of LNG exports via the Strait of Hormuz.
Another way of visualising what has happened over the last two weeks is through the first of the two charts below. This shows that demand since the start of March has low enough to has almost completely offset the year-on-year increase that had occurred in the first two months of the year. As a result, the current year-to-date total is converging with last year’s values.
Source: Giovanni Bettinelli
