Oxford Energy Podcast – Why are gas prices so high?

In this podcast, David Ledesma talks to Mike Fulwood, Jack Sharples and Mostefa Ouki about the current gas price rally, the outlook for the winter and potential risks. Mike Fulwood and Jack Sharples discuss the drivers behind the current bull run on gas prices, unpacking the differences in gas supply and demand in the first eight months of 2021 compared to the same period in 2019 (the last pre-pandemic year). Even though, during this period, nameplate global LNG export capacity rose roughly in line with global LNG demand, a series of unplanned outages have taken a substantial volume of LNG off the global market, causing it to tighten significantly. In Europe, while demand in 2021 was similar to 2019, declines in production, pipeline imports, and LNG imports left the market struggling to balance through swings in the use of storage stocks, shifting from net injections in 2019 to net withdrawals in 2021. Mostefa Ouki then discusses the potential impact of a non-renewal of the transit agreement for the Gazoduc Maghreb Europe (GME) pipeline that supplies Algerian gas to the Iberian Peninsula. While the non-renewal may not have material impact on the market in the medium to long term, in the context of volatile gas prices currently, it could become a preoccupation for Europe.