Unlike the 2022 energy crisis where coal stocks were low, current high inventories (7-8 times higher in China) provide a readily available and cheaper substitute for natural gas. This high substitutability is capping gas price increases despite major supply disruptions from the Middle East.
Despite significant disruptions, Qatar can restart its undamaged northern LNG trains to reach 80% of total capacity within two to three months from a hypothetical 'day zero'. The main uncertainty is not the technical timeline for the restart, but the political timing of when that process can safely begin.
The global gas market is rebalancing from a 300 MCM/day supply loss caused by the Middle East conflict. The U.S. has surprisingly offset 100 MCM/day of this deficit, with other suppliers contributing smaller amounts. The remaining gap is being filled by significant demand destruction, primarily in Asia.
Europe's power system has significant flexibility (over 10 BCM) to substitute gas with coal. However, this switch is not automatic; it requires a commercial incentive. Gas prices need to reach the €50-60/MWh range to make coal the more profitable option for power generation, thereby curbing gas demand.