All hail King Trump!
While Australia is busy destroying itself via the evil East Coast gas cartel, King Trump is working on a plan to save us.
The possibility of an end to the war in Ukraine is, of course, a positive development but all indications are that the outcome will reward Russia’s leader Vladimir Putin for an illegal invasion of another country and the killing and maiming of thousands of civilians.
The outbreak of peace talks has already hit global gas futures hard.
If we were to assume an AUD of 0.68 cents as risk premiums come out of forex as well, LNG imports would now land in Australia at $20Gj in 2026.
Moreover, if an actual peace deal were delivered, then look out. Goldman has more.
If Russian gas flows through Ukraine returned to pre-war levels of 42 Bcm/y, almost three times the flows observed in 2023/24, we would expect summer 2025 TTF36%-56% below our 50 EUR/MWh ($15.10/mmBtu) base case, depending on whether those flows were available for the full summer or only from 2H25…the incremental 42 Bcm/y flow, if sustained through 2026, would cause the 2026 storage path to look very congested very early. This would likely push 2026 TTF below 20 EUR/MWh ($6/mmBtu), triggering a price discovery process to incentivize enough Asia LNG demand to help drain gas supply out of Europe. This scenario, hence, poses at least 50% of downside to our (below market) 36 EUR/MWh2026 TTF forecast.
A $20 TTF price has US LNG struggling to be viable in Asia with prices at USD6Gj or below.
In that event, Aussie LNG imports would land at around $10Gj. And, given the looming global glut from 2027, stay there for a few years.
It may be even better given the gas export cartel would be incentivised to pump more gas at home to prevent market share losses to imports so that the local price would probably fall under $10Gj.
Much of this energy price relief would be absorbed by cancelled bill rebates under Peter Dutton and probably Labor as well.
But it would wipe out the additional shock Dutton had built in with his gas policy framework and offer some lower bills instead.
Then again, who can say the war is likely to end?
US officials told some Europeans in Munich that they believe America and China are the two big powers in discussions over Ukraine, even though the war is in the EU’s backyard, one European official said. The US will keep the Europeans abreast on progress but they’re not seen as significant players.
One veteran official said that Vance’s attack during his debut abroad was a watershed moment because it was such a fundamental attack on Europe’s values. It didn’t matter that European nations were dependent on the US for security when they shared the same basic principles, the official said. Without that common understanding, liberal democracy in Europe is at risk.
Europe now find itself in a desperate race to agree on plans for Ukraine’s security in the event of a peace deal with Trump already rushing into negotiations with Russia. The US president is planning to see Vladimir Putin as soon as this month.
History is moving.
