Europe faces looming gas shortage

The cessation of Russian gas transit through Ukraine will lead to a global shortage of this resource, which will have a serious impact on the world's poorest countries. 

According to Bloomberg data, the loss of gas supplies from Russia to Europe could trigger a "global scramble for natural gas". This, in turn, will lead to increased demand for liquefied natural gas (LNG) and a host of negative consequences.

Europe will be hit first, where rising gas prices will cause a prolonged period of high bills for consumers and industrial enterprises. Moreover, such consequences will be particularly acute for poorer developing countries, from Asia to South America, which will be squeezed out of the market.

In addition, Europe risks failing to meet its target gas storage levels this winter season, creating conditions for a "scramble for supplies". New LNG production capacity, unfortunately, will not be able to meet the increased demand. Francisco Blanch, a commodities expert at Bank of America Corp, noted that Europe will feel an energy shortage in 2024, and all additional volumes of LNG that appear on the global market will be directed to offset the deficit of Russian gas.

To meet the increased demand, Europe will need to import 10% more gas than last year. This will lead to a diversion of supplies from Asia and trigger competition, which in turn will result in rising prices. Such a situation will negatively affect the economies of countries such as India, Bangladesh and Egypt, making gas unaffordable for them, and will also hinder the recovery of the German economy.