Millions of households could face higher energy bills this winter as the developing "super" El Niño weather pattern sparks a global scramble for gas supplies, analysts have warned.
Global Gas Competition Intensifies
Experts at the Independent Commodity Intelligence Services (ICIS) said soaring temperatures in Asia could drive up demand for liquefied natural gas (LNG), intensifying competition with Europe just as countries race to refill storage ahead of winter. The warning comes as energy markets are already under pressure following the conflict involving Iran and the disruption to supplies moving through the Strait of Hormuz.
Record El Nino Expected
ICIS analyst Andreas Schroeder said a record El Niño expected this summer could force Europe to use up several billion extra cubic metres of gas over winter due to colder weather forecast for early 2027.
"A record El Niño is due this summer. Soaring temperatures could drive Asian buyers back into the market for power generation fuel even as Europe looks to step up injections," Mr Schroeder said.
"El Niño means a wetter, warmer start to winter, but a colder, drier first quarter in 2027. We have estimated for Europe it will need up to seven billion extra cubic metres of gas over the whole winter, just because of these cold weather effects."
Understanding El Nino
An El Niño weather event occurs every two to seven years on average and is a natural climate phenomenon characterised by unusually warm ocean temperatures in the central and eastern Pacific. It disrupts normal wind and weather patterns, triggering significant shifts in global temperatures, rainfall, and extreme weather events. An event is typically declared when sea surface temperatures in the tropical Pacific rise at least 0.5C above the long-term average.
While its effects vary, typical impacts include increased risk of hot, dry weather in Australia, Southeast Asia, southern Africa and parts of the Amazon, but wetter, stormier conditions in the southern US, Peru and parts of East Africa.
Impact on Energy Markets
A hot summer under El Niño is predicted to send Asian power demand soaring as people turn on air-con units to stay cool. At the same time, the weather phenomenon could lead to a freezing winter in Europe, raising gas demand.
However, this year's El Niño comes at a time when energy markets are already reeling from the outbreak of war in Iran and closure of the Strait of Hormuz, which has cut off about a fifth of global LNG supplies.
Mr Schroeder warned that the Middle East conflict had created fuel shortages and that Asia was currently outbidding Europe for US supplies, leading more tankers to head to Asia than to Europe. Countries including Japan and Taiwan have been willing to pay nearly a fifth more for LNG than Europe, leaving the latter's winter reserves largely empty.
Impact on UK Households
LNG plays a crucial role in powering British homes and businesses, helping generate electricity and supplying fuel to around 27 million household boilers across the UK. Britain uses roughly 75 billion cubic metres of gas every year. Around half comes through pipelines from Norway, while North Sea production accounts for about 30%. The remaining fifth is imported as LNG, with most shipments arriving from the US.
