European natural gas, LNG market shrug off US-EU trade deal
European natural gas and LNG market sources were largely unfazed by the energy requirements in the EU-US trade deal that US President Donald Trump and European Commission President Ursula von der Leyen announced July 27.
As part of the agreement, the bloc will import a combined $750 billion of US LNG, oil, and nuclear fuels over the next three years, according to a statement released by von der Leyen and an EU spokesperson.
The formal text of the trade deal has yet to be released. It is expected to be published by Aug. 1, according to the spokesperson. From there, it remains unclear whether it would then require approval from the European Parliament and Council. “We still do not know the exact legal basis it will have,” she said.
Several uncertainties remained in the meantime, including about the timing of the US energy purchases and about enforcement.
“Given the three-year time period in the stated informal agreement, we assume that much of the $750 billion of US energy purchases would likely need to include additional spot and short-term sales,” S&P Global Commodity Insights LNG analyst Ross Wyeno said. “The framework, as it stands, does not necessarily incentivize additional long-term contracting.”
Many see the $750 billion commitment as the EU doubling down on a pre-existing trend toward great trade dependency with the world’s largest LNG exporter as it seeks to wean itself off Russian gas and LNG following Russia’s full-scale invasion of Ukraine in 2022.
“This deal is more of a rebranding of positions that were already emerging due to the market shifts post-2022,” said Youri Leconte, an LNG portfolio analyst with Calypso Commodities.
The EU, which lost access to cheap Russian fossil fuels following Moscow’s invasion of Ukraine, has seen its economy struggle due to high energy costs and has been diversifying its gas imports.
The US has become a key supplier. According to Commodity Insights data, the EU imported some 37.3 million mt of LNG from the US in 2024, accounting for around 45% of its total LNG deliveries.
The trading bloc is considering a proposal from the European Commission to phase out Russian gas and LNG imports by Jan. 1, 2028.
‘A declaration of intent’
While the July 27 agreement reaffirms a direction of travel toward greater EU-US energy trade, analysts are skeptical that LNG imports will skyrocket to the degree implied by the headline $750-billion figure.
“The EU would need to roughly triple its energy imports from the US in value terms,” said Anne-Sophie Corbeau, a research scholar with Columbia University’s Center on Global Energy Policy. “Unless prices massively increase and we import everything from the US (also replacing pipeline gas), we would barely get there.”
Extrapolating from 2024 figures, the EU would have to import 60% of its energy from the US to meet the target, according to Corbeau.
“Nobody in the EU wants such dependence,” said Leconte.
David Goldwyn, president of Goldwyn Global Strategies and chairman of the Atlantic Council Energy Advisory Council, said the $750 billion commitment “strikes me as both aspirational and to some extent unenforceable, but it’s a very positive signal in terms of encouraging European utilities to buy US LNG or to buy US crude and products.”
Goldwyn said the commercial terms of any forthcoming contracts will still have to be competitive since the EU cannot compel European utilities to purchase US energy.
Joseph Makjut of the US-based Center for Strategic and International Studies said that meeting the $750 billion would require considering not only LNG purchases but also crude oil, products, and maybe even nuclear reactors.
“You’re not going to make the jump to energy trade anywhere near hundreds of billions on LNG alone,” said Makjut, who heads CSIS’s energy security and climate change program. Achieving the goal would be difficult, but “I think that the US and the EU can find lots of ways to partner to increase energy exports to the EU that will be mutually beneficial and will realize the spirit of this trade negotiation.”
US LNG trade groups saw the announcement as encouraging but were still awaiting details.
“We are heartened to hear that the EU continues to view US LNG as a means to improve the energy security of its member states as it eschews all Russian energy imports by 2027 as well as a means to help reach an overall US-EU trade agreement,” said Fred Hutchison, CEO of LNG Allies.
EU energy imports totaled Eur375 billion ($437 billion) in 2024, according to Aldo Spanjer, Head of Energy Strategy at BNP Paribas. Of this, about Eur76.9 billion was from the US, with Eur15.3 billion from US LNG trade.
“The agreement is a declaration of intent more than anything,” Spanjer said.
Price impact
The US-EU trade deal comes as European LNG prices hit a recent low. Platts, part of Commodity Insights, assessed the DES Northwest Europe LNG marker at $10.818/MMBtu July 25, its lowest level since May 14. The price subsequently rebounded to $10.987/MMBtu July 28.
Across the Atlantic, Platts assessed the Gulf Coast Marker for US FOB cargoes loading 30-60 days forward at $10.14/MMBtu July 28, up 12 cents from the prior assessment.
Commodity Insights analysts expected the deal to be mostly bullish for global gas and LNG prices, based on positive market sentiment and expectations that talks are conducive and progressing ahead of Trump’s Aug. 1 deadline to impose substantial tariffs unless fresh trade deals are agreed upon.
“Much of the market optimism is focused on averting a more disruptive trade dispute; however, as seen in the US-Japan deal, many of the investments agreed are either preliminary or unclear in their scope and implementation,” the analysts said.