Iran War Pushes LNG Supply Glut Back Two Years, Equinor Warns

Iran War Pushes LNG Supply Glut Back Two Years, Equinor Warns With EU gas storage at 34% and Hormuz blocked, the LNG surplus traders were pricing for next year has been pushed firmly back. The Hormuz blockade has reordered the global LNG timeline by two years, Equinor's head of LNG told Montel on Thursday, issuing one of the most direct market assessments yet from the continent's largest gas supplier. The anticipated supply glut — the structural bearish anchor for gas positioning heading into this decade — is no longer arriving on schedule.¹ The problem is Europe's storage position. Equinor said this week that EU gas inventories, currently at just 34% of capacity, will not reach the targeted 80% filling level before winter. That is not a marginal shortfall. A continent that entered the crisis already running lean faces the next cold season without a comfortable buffer, and with Qatari LNG volumes constrained by Hormuz disruption, alternative supply routes cannot fully compensate. Equinor's director of power and gas trading said Monday that energy supplies will not return to normal this year.^4,1 On the crude side, Saudi Aramco has been more explicit about the supply math. The world's biggest oil exporter warned of "catastrophic consequences" for markets if Hormuz shipping stays blocked, saying it expects to supply roughly 70% of its usual crude output while the strait remains closed.³ A Bloomberg Intelligence survey published this week showed that most market participants now expect Brent to average $81 to $100 a barrel over the next 12 months, with respondents estimating global supply disruptions at three million to seven million barrels a day. Few expect outages above 10 million barrels.² Yet oil's near-term price action tells a more complicated story. Prices headed for a 7% weekly loss earlier this month as traders struggled to price conflicting signals from US-Iran negotiation talk against the reality of ongoing attacks and blocked shipping. European jet fuel spot premiums fell to their lowest point since the conflict began — $99 per metric tonne over ICE gasoil futures, Argus data show — as near-term demand erosion bit into refining margins.⁴ The beneficiaries of that uncertainty have been the majors. BP was on course for a doubling of first-quarter profit to £2.7 billion as elevated energy prices flowed through to upstream revenues. The windfalls have not gone unnoticed in Brussels: EU energy commissioner Dan Jorgensen described the crisis as "as serious as the 1973 and 2022 crises combined," and analysts told Montel this week that European governments face growing pressure to revisit excess profit levies.⁵ Norway offers only modest relief. An analyst told Montel that Norwegian producers could add roughly 1 billion cubic metres of additional gas to European markets this summer if Qatari LNG remains blocked. That covers a fraction of what Europe needs to close the refill gap.⁶ In that supply-constrained environment, Equinor and Aker BP moved this week to consolidate their Norwegian continental shelf positions, executing a collaboration agreement that includes an exchange of interests in the North Sea and Barents Sea. The deal is a signal that the two biggest NCS operators see value in aligning on joint assets as the Iran war reshapes European supply dependency for the medium term.⁷ For traders, the signal to watch is whether US-Iran talks produce anything concrete before summer demand peaks. The US Energy Information Administration projects American crude output will reach a record 14.1 million barrels a day in 2027, which would eventually weigh on Brent — but not soon enough to change this winter's gas refill arithmetic. About a quarter of Bloomberg survey respondents expect hedging and risk-management activity to rise; just 15% see more opportunistic risk-taking. That ratio reflects a market where the upside scenario is priced but the downside has not been fully tested.²