Analysts: US presidential election could shake up gas market dynamics

As a result of the significant development of the liquefied natural gas (LNG) market in recent years, or rather the increase in the number of export and import terminals worldwide, the global market has become much more interconnected. The commodity is easier to transport and process in larger volumes. It could therefore also be significantly affected by the upcoming US presidential election, given that the country has become a global powerhouse thanks to shale gas production.

As reports, energy portal Montel, Joe Biden earlier this year paused the granting of approvals for new LNG projects. Both presidential candidates are nevertheless expected to end this “pause”, if it even lasts until the election period. Greater concerns are therefore that, should Donald Trump be elected, the trade war with China could intensify again. And according to analysts, this could theoretically affect the LNG market as well.

During his time in the Oval Office, Trump introduced import tariffs on China that disadvantaged exports of Chinese goods to the US, with the aim of increasing local production and sales by US companies. China responded with its own countermeasures, which ultimately shook the global economy.

At the time, the oil market in particular reacted very sensitively to various statements, as a trade war or the threat of one affects demand for energy commodities. As already mentioned, the gas market has become substantially more globalised since then. This could therefore lead to greater price volatility in the gas market as well. And Donald Trump has already promised to introduce new tariffs, or duties, on Chinese products should he be re-elected.

Specifically, he mentioned the idea of introducing a 60% tax on all Chinese imports. According to analysts, a Chinese response would not be long in coming. In this case, retaliatory measures in the same vein as the previous introduction of a 25% tax on LNG imports from the US would be expected.

“Tariffs can shake up the LNG market, but it depends on their level,” said Ira Joseph of Columbia University. “Small tariffs could be absorbed, but large ones can alter trade routes.”

However, analysts believe that Donald Trump, whom they consider a relative supporter of fossil fuels, will avoid measures that could have a more significant impact on energy markets.

“Trump is favourable towards US oil and gas exports. Greater changes can be expected in the domestic energy market, where he could very likely revoke several IRA (Inflation Reduction Act) policies. In particular, direct grants for green energy,” said Henning Gloystein, Eurasia director for energy, climate and natural resources, regarding possible changes.

On tariffs or duties, Gloystein added that export tariffs on LNG supplies to Europe cannot be ruled out if Trump is elected president. It is worth recalling that last year the US was the EU’s largest LNG supplier, providing nearly 50 % of all imported volumes.