Natural gas: the fuel for EPS upgrades

Research evidence excerpt

Natural gas: the fuel for EPS upgrades

Middle East LNG supply has ground to a halt

Shipping data shows that the steady trickle of LNG vessels that had started crossing the

Straight of Hormuz has once again dropped to zero since 12 July (Exhibit 3). Analysis

from BofA Commodity Research shows that this disruption to LNG exports from Qatar

could have an increasingly significant impact on the global gas market the longer it is

sustained. If the restart of supply continues through into 4Q26, the overall loss of gas

supply could exceed that seen in 2022.

Exhibit 3: No LNG vessels have crossed the Straight of Hormuz Exhibit 4: Supply losses will exceed those in 2022 if there is no restart

since 12 July of Qatari LNG supply until 4Q26

Strait of Hormuz LNG tanker vessel crossings (number per day) 2022 gas supply and 2026 Mid-East LNG supply loss scenarios (mn mt)

15 80

5 June 2026 re- 3Q re-start 4Q re-start

start

2022 2026 Middle-East LNG outage scenarios

Russia pipeline gas Freeport LNG

0 SoH closed LNG re-start

Jan-26 Feb-26 Mar-26 Apr-26 May-26 Jun-26 Jul-26 2 Qatar trains damaged

Source: Bloomberg Source: Bloomberg, BofA Global Research

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Asian demand destruction has mitigated the impact

The initial rally in gas prices following the start of hostilities and the subsequent closure

of the Strait of Hormuz lasted only a few weeks. This is because the impact has thus far

been mitigated by demand destruction. Despite concerns over LNG supply disruptions,

Asia has not emerged as a major incremental buyer of spot cargoes. This has been

driven by a combination of fuel switching and reduced industrial gas consumption, and

helped by high inventory buffers in Japan, South Korea and China.

EU gas storage levels are far below normal