Limiting gas prices in Europe threatens to intensify the energy crisis

Limiting natural gas prices in Europe threatens to lower shipments to the region and intensify the energy crisis.

According to a report by Goldman Sachs Group Inc. and Samantha Dart, published on Monday, a price ceiling without the associated demand cap could exacerbate the gas supply shortfall by stimulating consumption. This, in turn, could tighten global fuel supplies and also force governments to ration gas in 2023.

Additionally, the cap will make it difficult for European importers to raise rates significantly in order to secure LNG supplies. The gas industry informed that LNG cargoes will be prioritized in Asia if prices there exceed the European region's margins. While China's reopening, natural gas demand behaves in the same fashion.

LNG importers in Europe and Asia compete for supplies from exporters such as Qatar and the United States.