Influenced by climate change, the upcoming El Niño phenomenon is anticipated to strike again, posing another challenge to the global economy already under pressure from the impact of the situation in Iran.
El Niño occurs every few years, during which trade winds in the tropical Pacific weaken and ocean temperatures rise. This phenomenon typically lasts up to a year, peaking around the end of the year. It often leads to drought and high temperatures in much of Asia, while causing increased rainfall in areas such as the Gulf of Mexico.
The previous El Niño from 2022 to 2023 triggered a series of chain reactions: India imposed a ban on rice exports, dengue fever spread, water levels in the Panama Canal dropped, Brazil experienced severe floods, and prices for chocolate ingredients rose.
Meteorological forecasting agencies in the United States and other regions indicate that El Niño is highly likely to form this year. Currently, abnormally high ocean temperatures suggest that this El Niño could be intense, but specific details remain uncertain.
A commodity strategist at BNP Paribas stated that the energy sector is already facing uncertainties over when the Strait of Hormuz will reopen to navigation, and the unpredictability brought by El Niño further exacerbates the situation. He predicts that as temperatures rise, the demand for air conditioning electricity in Asia will increase, leading to higher consumption of liquefied natural gas (LNG). This could result in a supply gap in Europe in the coming months.
He added, "LNG carriers may be redirected to Asia instead of being sent to European storage facilities. This means that Europe's natural gas reserves this winter will start from a low base."
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