Record heat gives way to global winter gas shortage fears as Iran war rages on

As Europe and much of Asia suffer through record heat waves, fears are already shifting to the upcoming winter, with shortfalls of natural gas and electricity price spikes anticipated as a result of the war in Iran and Middle East supply outages.

The war broke out at the end of February—fortuitously avoiding disrupting the previous winter—but Qatari liquefied natural gas (LNG) outages coupled with higher-than-usual summer demand have kept import-dependent nations from adequately replenishing their natural gas storage ahead of the looming winter months. Prices already are surging and the competition for cargoes is escalating.

“It’s pretty dire. It’s going to be a tough winter, period,” said David Lewis, senior analyst for gas and LNG at the Wood Mackenzie energy research firm. “Europe and Asia probably got into a false sense of security in March, April, and May when the weather was very favorable.”

The winter months will create strong gas demand for heating with limited LNG cargoes available, forcing European, Asian, and North African countries such as Egypt to outbid one another for shipments, creating larger price spikes. Just this past week, natural gas pricing in the well-supplied U.S. remained relatively flat while spot prices in Eur...