Fitch Ratings has raised its TTF gas price assumptions for 2025 and Henry Hub assumptions for 2025-2026, reflecting year-to-date prices, the cold winter this year, and tighter supply and demand. Oil prices and mid-cycle gas assumptions are unchanged. We have added price assumptions for 2028 to the set.

We have kept all oil price assumptions unchanged. OPEC+ had large spare capacity of over 6 million barrels per day (MMbpd) in January and indicated plans to start unwinding its production cuts from April. Blanket US tariffs on China may weigh on global economic growth and oil demand, increasing oversupply and adding to pressure on oil prices. The IEA forecasts global oil supply will grow by 1.6MMbpd in 2025, and demand increase by about 1MMbpd.

The tariffs on Canada could widen the Canadian-US price benchmark spreads and affect US refining margins. The trade war and additional sanctions on Russia and Iran will increase market volatility. China’s retaliatory tariff measures – a 15% additional duty on US coal and LNG imports and a 10% additional duty on US oil imports – are unlikely to have material implications for global energy markets.

The increased 2025-2026 Henry Hub price assumptions are supported by higher year-to-date prices due to cold weather and significant depletion of gas storages, and increasing demand in LNG markets, leading to higher exports. The supply response has been modest so far, and we do not expect it to rise significantly in the near term. Short-term prices are likely to remain volatile.

The increased TTF price assumption for 2025 reflects higher year-to-date prices due to cold weather and early storage depletion in Europe, requiring greater purchases from the market to replenish reserves before the next winter. It also reflects increased competition with Asian buyers for LNG shipments and geopolitical tensions.

The colder winter than last year, especially in western Europe, has led to a gradual reduction in natural gas storage levels. By mid-February, EU gas storage levels were over 20 percentage points lower than in the same period in 2023 and 2024, although higher than in 2022. We consider supply risk for Europe to be minimal, although prices are likely to remain volatile in 2025.

China’s gas consumption in 2025 will increase by 6.5%, reaching about 456 billion cubic meters (bcm), driven by urban and industrial sector demand, according to the Shanghai Petroleum and Gas Trading Center. China’s dependence on gas imports was 40.9% in 2024, with a significant share coming from LNG. LNG deliveries from the US rose by 53.2%, increasing competition for gas supplies with Europe.

Geopolitical tensions, including the full suspension of pipeline deliveries to Europe via Ukraine at end-2024 following the expiry of the gas transit agreement, and unsettled military conflicts in the Middle East, also affect spot market prices.

Source: Fitch Ratings