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LNG Supply Risks Could Persist Through 2035 Amid Gulf Disruptions, Wood Mackenzie Says

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Global gas and power markets face shifting supply and demand pressures from LNG disruptions, low European storage and rising electricity needs, Wood Mackenzie said in a Thursday note.

Wood Mackenzie expects LNG supply to average 30 million metric tons per annum lower through 2035 under a summer settlement, versus 70 mtpa lower under an extended disruption, with Gulf LNG projects delayed up to five years.

However, over 150 mtpa of LNG capacity is being developed outside the Persian Gulf, which could help global supply growth pick up over time.

Those supply risks make European inventories an important market signal, as low storage levels could keep the region exposed heading into winter despite slower Asian LNG demand.

Beyond Europe, rising electricity needs are emerging across Asia Pacific, where data center growth could lift annual power demand growth to 4.3% from 2025 to 2030, compared with 3.5% without data centers.

In Asia Pacific excluding China, data centers have 53 GW of planned capacity, nearly three times the 14 GW already in operation. The trend extends to the US, where the industry is seeing a renewed dash to gas, with turbine orders also rising.

What else is happening in Oil & Energy?

Oil & Energy

US Oil Update: Crude Settles Lower as Saudi Rerouting Eases Supply Fears

Crude futures retreated in after-hours trading on Thursday after reports that Saudi Arabia is rerouting crude exports through Oman amid expectations that its East-West pipeline could return to service eased fears of a prolonged supply disruption.Front-month West Texas Intermediate futures fell 1.31% to $101.09 per barrel, while Brent futures retreated 1.83% to $103.89/bbl.Gelber & Associates strategists said October WTI trades at $100.78/bbl, down 1.6%, as Saudi Arabia offers additional Asian cargoes through ship-to-ship transfers via Oman, reducing the immediate risk that pipeline damage will strand exports.The US Energy Information Administration said in its weekly report commercial crude oil inventories decreased by 600,000 barrels to 423.4 million barrels in the week ended Sept. 11.Crude inventories are 1% above the five-year average, the EIA said. The draw contrasted with a 7.1 million-barrel American Petroleum Institute build reported for the same period.On the supply front, the growing tightness in diesel markets, including in the US, China and Russia, has raised speculation about possible US export controls on crude oil and refined products.Average US retail price for regular gasoline rose 16 cents over the past week to $4.43 per gallon, the American Automobile Association said in a Thursday note, as elevated crude prices and continued volatility around the Strait of Hormuz pushed fuel costs higher.Tom Kloza, chief energy adviser at Gulf Oil, said that diesel prices surged to a record $6.39 per gallon on Thursday, surpassing the previous high set in June 2022.The combined price of a gallon of diesel and a gallon of gasoline also climbed to a record $10.83, exceeding the previous June 2022 peak of $10.80, Kloza said. US gasoline prices stood at $4.44 per gallon.Saudi Arabia is reportedly seeking to restore about half the capacity of its East-West pipeline within days following drone attacks that damaged pumping stations last week.The Gulf state has also offered additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman's Sohar port, according to media reports, providing an alternative route for barrels affected by the disruption.Soojin Kim, research analyst at MUFG, said that a faster restoration of Saudi pipeline capacity could ease physical-market pressures, though constrained Hormuz flows and continued Russian supply disruption will keep crude prices elevated.On Wednesday, Secretary Wright said 18 million barrels of crude and refined products moved through the Strait of Hormuz on Tuesday with US assistance, during a Fox News interview. The US Department of Energy confirmed the remarks in an emailed response to.Meanwhile, the US sanctioned an Iranian cryptocurrency exchange controlled by sanctioned Iranian financier Babak Zanjani on Thursday, accusing it of processing payments for ships to transit safely through the Strait of Hormuz.The US Treasury Department said the bank routed hundreds of millions of dollars to the Islamic Revolutionary Guard Corps and used it to transfer funds paid to Iran's newly established Hormuz Safe Marine Services Authority.The US military has also continued efforts to control maritime traffic around Iran. The US Central Command said in a post on X on Thursday that it had redirected 104 commercial vessels to ensure compliance with Washington's blockade, as of Sept. 17.

Oil & Energy

Hormuz Traffic at Reduced Levels Amid Regional Tensions

Commercial shipping traffic through the Strait of Hormuz remained constrained on Thursday as heightened tensions and recent tanker attacks continued to weigh on vessel movements through the key energy chokepoint.The latest data from Windward showed 15 vessels crossed the strait on Thursday, comprising eight inbound and seven outbound transits, underscoring the limited movement through the strategic waterway.The UK Maritime Trade Operations received a report involving an unknown projectile at an unspecified location in the Hormuz. No damage or pollution was reported.The UKMTO said that activity by Iran's Islamic Revolutionary Guard Corps, including attempted attacks and harassment, continues. The agency said that such activity has maintained pressure on commercial shipping and contributed to lower traffic through the strait.Meanwhile, data from the US Naval Forces Central Command indicated average traffic of about 30 vessel transits per day over the previous 96 hours.The UKMTO said that differing estimates reflect the challenges of tracking vessels in a high-risk environment where some ships may reduce or switch off their tracking signals.The US military has also continued efforts to control maritime traffic around Iran. The US Central Command said the US Army had redirected 104 commercial vessels to ensure compliance with Washington's blockade, as of Sept. 17.UKMTO reported no confirmed attacks or disruptions in the southern Red Sea and Bab el-Mandeb.Houthi forces remain in control of Yemen's coastline and islands commanding the eastern approaches to the Bab el-Mandeb, including the areas around Mocha, Dhubab, Mayun, Zuqar and Hanish, following seizures between Sept. 10 and 12.Commercial traffic through the waterway has remained below normal levels following a Houthi embargo declaration on July 20 and the group's territorial gains.

Oil & Energy

Upstream M&A Heads Toward $175 Billion as Oil Volatility Complicates Deals, Rystad Says

Global upstream mergers and acquisitions are on track for another strong year as a deep deal pipeline faces tougher execution amid volatile oil prices and geopolitical risks, Rystad Energy said in a Thursday note."Oil price volatility has created a deeper opportunity set, but it has also made deals harder to execute," said Atul Raina, Vice President, oil and gas M&A at Rystad.Raina noted that prompt crude prices are also posing a hurdle. "Sellers are looking at elevated spot prices and near-term cash flow, while buyers are underwriting against a backwardated price strip and the possibility that current conditions may not last," he added.The sector is on track to surpass 2025's $175 billion upstream M&A total, with nearly $130 billion in deals announced through August 2026.Another $137 billion in opportunities remains on the market, with about one-third of that pipeline needing to close for 2026 deal value to exceed last year's level.Global upstream M&A deal value climbed 55% over the year to about $100 billion in the first half, while the number of deals fell 12% to 217.North America generated over $68 billion during the period, representing 68% of global first-half deal value.Shale transactions exceeded $63 billion, accounting for 92% of North American activity and 63% of global upstream M&A.Devon Energy's (DVN) $25.1 billion merger with Coterra Energy and Shell's (SHEL) $16.4 billion acquisition of ARC Resources together represented 41% of global deal value.The Middle East conflict affected deal activity, with about $56 billion, or 56%, of first-half transactions announced before Feb. 28, when the conflict began.Deal activity stayed relatively slow from March to June, with about $44 billion announced during the period, even though oil prices remained near $99 a barrel.That monthly deal pace marked the lowest average since 2016, when activity averaged $10.7 billion a month, and 2020, when it averaged $8.6 billion.Uncertainty around oil prices is prompting more exploration and production companies, especially private US shale firms, to consider selling assets.This has pushed the potential deal pool up to $137 billion, from roughly $98 billion before the conflict. However, the same uncertainty is making it harder to agree on prices and close transactions.Rystad expects deals to increasingly use delayed or performance-based payments, flexible closing dates, and stronger exit terms to help buyers and sellers manage risk.International M&A also picked up, with deal value outside North America rising 7% over the year to over $32 billion in the first half.South America accounted for about $13 billion, helped by activity in Argentina, while Africa attracted renewed interest from major oil companies buying offshore exploration assets in Angola and Namibia.About $52 billion in international assets are still available, according to Rystad.Rystad expects large oil firms to drive much of the remaining activity by selling stakes, bringing in partners and reshaping their portfolios while freeing up capital for other projects.Price: $48.69, Change: $+0.25, Percent Change: +0.52%

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