Asian Heat Squeezes LNG Flow to Europe
Peak summer heat across Northeast Asia is prompting a surge in liquefied natural gas (LNG) demand, forcing slower flows to Europe as gas-fired power plants race to meet rising cooling needs, according to Goldman Sachs. The shift is straining European supply and pushing global traders to watch closely. Goldman analysts warn that Asia’s stronger-than-usual weather patterns are redirecting key LNG volumes away from traditional European buyers, Bloomberg reported on Monday. While U.S. LNG exports hit record levels this year, tight terminal capacity and long-haul shipping mean Europe is seeing smaller cargoes during this high-demand period. This bottleneck is forcing European utilities to rely more on pipeline gas, including Russian flows, even in the face of political resistance and Western sanctions. That dynamic complicates EU energy strategy and risks higher costs during cooler months. Against this backdrop, attention has turned to Washington’s role. Market sources say President Donald Trump is monitoring the situation and may use executive authority to incentivize supply, in the longer term by fast-tracking new U.S. LNG export infrastructure, and in the shorter term by potentially adjusting tariff and shipping regimes to improve flow flexibility during peak seasons. Goldman notes that Europe now faces a double squeeze: reduced LNG inflows during summer heat, followed by a possible rebound in pipeline volumes that heightens geopolitical vulnerability. If tanks arrive later than expected, spot LNG prices in Europe could spike ahead of winter. Impact?sensitive sectors like petrochemicals and power generators are already reworking supply contracts and hedging strategies in response. With Asia redirecting LNG volumes and Europe entering a tighter market, policy bandwidth in Washington has taken on heightened significance. A presidential push for U.S. terminal approvals or LNG diplomacy could help rebalance global flows, but traders warn timing may be too late to influence this summer’s peak pressure.
Tight Oil Market Shrugs Off Supply Surge
Crude oil markets have turned out to be tighter than most analysts appeared to expect, and are ready to absorb OPEC+’s higher-than-forecast supply boost next month. For proof, look no further than oil prices after the latest OPEC+ announcement that took traders and analysts by surprise. On Monday, after OPEC+ said it would add more than half a million barrels daily to its combined output, Brent crude was trading at around $68 per barrel. Later in the week, it spiked to over $70 per barrel before retreating to end the week with a modest gain. By all accounts, oil prices should have fallen after OPEC+ said it would be returning more barrels to the market. Yet they did not. They rose, revealing, once again, a divorce between market perceptions and physical realities. “You can see that even with the increase in several months, we haven’t seen a major buildup in the inventories, which means the market needed those barrels,” said the energy minister of the United Arab Emirates, Suhail al Mazrouei, on Wednesday during OPEC’s seminar in Vienna, as quoted by Bloomberg. Indeed, global oil inventories are not exactly bursting at the seams, according to none other than the International Energy Agency. In its June oil market report, the IEA said that while non-OECD crude oil inventories had gained earlier in the year, inventories in the OECD were 97 million barrels below their level from the same time last year, driving total global inventories down. There is also the matter of demand, which is currently in its peak season in the northern hemisphere—and there is a risk of fuel shortages. More specifically, the market could swing into a diesel shortage, the Wall Street Journal reported this week, citing analysts. The reason for the shortage, to be fair, is not so much crude oil prices but low refining margins. Yet it has to do with demand, which so many presumably reputable sources insist is weakening. “Because of those run cuts, we started this year with not enough diesel in storage, and saw increased demand because of the cold winter,” Sparta Commodities analyst James Noel-Beswick told the WSJ, referring to refiners’ decisions to reduce run rates in response to the lower refining margins in late 2024. “I think they’re going to be a little bit behind the curve, and there’s some catching up to do,” Dennis Kissler, BOK Financial senior vice president of trading, told the publication. When inventories recover, “I think it’s going to be at higher prices.” It seems, then, that OPEC is not just talking up its own book when it says oil markets are tight. If the OECD inventory situation is not proof enough, U.S. inventories at Cushing, Oklahoma, are at the lowest in 11 years, per Bloomberg, and U.S. diesel inventories are a solid 23% below the five-year average for this time of the year. The tightness of oil supply globally was highlighted on several occasions earlier in the year as well, with the flare-ups in Middle Eastern violence. Each flare-up automatically led to spikes in prices even though no oil fields or infrastructure have been targeted by any party involved. Had the market been as oversupplied as many claimed, only a direct missile hit on an oil field would have led to price spikes, although some noted that the oil price spike would have been more pronounced had the market been tighter. Still, many commodity analysts are holding on to the view of a potential surplus later in the year. That is at least some change from earlier forecasts that said the market was already oversupplied and OPEC+ was only going to make a bad supply situation worse. Now, forecasts are being revised in recognition of physical realities, but still expect a surplus. ING commodity analysts, for instance, wrote this week that OPEC’s supply boost was expected, reiterated its prediction that it would agree to one more boost for September, and then take a break. “These increases should move the global market into a large surplus in the fourth quarter, intensifying downward pressure on prices. For now, though, the market remains relatively tight through the northern hemisphere summer,” Warren Patterson and Ewa Manthey wrote. OPEC, meanwhile, revised its demand outlook for oil, lowering the 2026 projection to 106.3 million barrels daily from 108 million bpd that it exapected last year. The reason: slowing Chinese demand growth. That would be the same slowing demand growth that every analyst has been noting as a driver of demand weakening and eventual destruction. “Right now, if you look out the window, the market is pretty tight,” Rapidan Energy Group’s Bob McNally told Bloomberg, adding that the balance between demand and supply would begin changing after peak demand season ends—which will coincide with the end of OPEC+’s unwinding of production cuts.
U.S. and Brazil Become Key Oil Suppliers to India
India has sharply increased its crude oil imports from the United States and Brazil in the first half of 2025, marking a strategic deepening of ties with non-OPEC suppliers amid heightened global volatility and supply risk recalibrations. According to new data from S&P Global Commodity Insights cited by Indian media outlets, US crude shipments to India rose 51% year-on-year to 271,000 barrels per day between January and June, up from 180,000 bpd a year earlier. Imports from Brazil surged 80% to 73,000 bpd, compared to 41,000 bpd during the same period in 2024. These were the highest growth rates across India’s import portfolio, underscoring a decisive pivot toward Western Hemisphere barrels. The increase follows multiple converging developments. India’s state-run refiners have sought to insulate procurement from OPEC+ volatility and disruptions in the Middle East. Reduced Chinese liftings of US crude opened spot-market opportunities, while freight rates from the Atlantic Basin fell, improving arbitrage economics. Diplomatic engagement also played a role. Petroleum Minister Hardeep Singh Puri met with Brazilian energy officials earlier this year, and Prime Minister Narendra Modi’s Washington visit in April included energy cooperation as a key agenda item. Russia retained its top position with 1.67 million bpd in H1 2025, though growth plateaued. Iraqi and Saudi volumes declined marginally, while Nigerian shipments rose 26% to 158,000 bpd. India doubled US crude liftings in Q1 partly as a signal to US policymakers amid trade pressures. Broader tariff negotiations are still underway. A temporary 90-day suspension on select US-India duties enacted in April is set to expire in August, and energy trade is now a central bargaining chip as talks enter a sensitive phase.
PNGRB wants GST on CNG vehicles to be lowered, no excise on CBG
From pegging Goods and Services Tax rate on a par with that on electric vehicles to waiving excise duty on compression of natural gas and on the compressed biogas component in the fuel, India’s Petroleum and Natural Gas Regulatory Board (PNGRB) wants for a clutch of changes to accelerate compressed natural gas (CNG) vehicle usage. It also wants maintaining a delta between CNG and petrol prices to keep the interest in the former going, primarily by tweaking excise duty rates. Reduction in allocation of CNG at administered prices or under the APM remains a concern and could upset the calculations, a document prepared by the oil regulator earlier but made public now showed. Listing the policy interventions required, PNGRB said the transport segment will be a key driver to push up the share of natural gas in India’s energy mix to 15% by 2030 from the existing around 6%. Towards this, it wanted GST on CNG vehicles to be reduced, from 28% to the 5% that levied on EVs. On changes to excise duty, the regulator said compression of natural gas, which is undertaken to fill more fuel in the tank and consequently increase vehicle range, is considered as deemed manufacturing. No excise duty would translate into lower CNG prices for consumers and consequent benefits to the environment from use of the eco-friendly fuel. Also with APM allocation headed towards zero in future, reduction in excise duty is necessary to keep CNG competitive compared to other alternate fuels. Full excise duty waiver will have an immediate impact of ₹65-70 billion a year for the exchequer, but bring multiple benefits, including reduction in healthcare costs. On CBG blending, the regulator said the additional excise and VAT that CBG attracts impacts the final price of CNG.