Investing.com -- The liquefied natural gas (LNG) market is on the brink of an unprecedented supply boom that could overwhelm global demand and drive down prices, according to BCA Research.

The industry is undergoing a structural shift, and Europe—once seen as vulnerable to energy shocks—is now positioned to benefit.

“Europe’s energy crisis will drown in a tsunami of LNG supply,” BCA strategists led by Marko Papic stress, arguing that fears of long-term industrial decline on the continent were “silly” and driven by flawed geopolitical narratives.

BCA expects a 40% increase in global LNG export capacity by the end of the decade, with the bulk coming from the U.S. and Qatar. Import capacity is also expected to expand by an additional 20% from already elevated levels.

“Over the coming four years, net global LNG supply will grow at the fastest pace ever,” strategists note.

The upcoming wave of supply is based on projects currently under construction, with even more potentially on the way if pending final investment decisions move forward.

At the same time, Europe has scaled up its regasification infrastructure—mostly through floating units—and is well-positioned to absorb incoming shipments.

The LNG market itself is becoming more liquid and globally integrated. Once bound by rigid infrastructure and long-term contracts, natural gas is now rapidly evolving into a commodity that trades more like oil.

Spot trading is expected to dominate by the second half of the decade, helped by a rising share of off-take contracts going to portfolio players who resell into the open market.

“LNG deliveries will become increasingly more flexible with a higher share traded at the spot market,” BCA said. “This will turn the market upside down on its head.”

Political support is adding fuel to the expansion. In the U.S., the Trump administration has restarted approvals for LNG export projects and positioned energy exports as a tool of foreign policy.

BCA also highlights a $5 billion loan to France’s TotalEnergies (EPA: TTEF ) for a terminal in Mozambique and reports that Washington may ease energy sanctions on Russia if the war in Ukraine ends. Such steps could amplify the global supply glut.

While prices may remain firm in the near term as Europe restocks storage, BCA forecasts a marked correction beginning in 2026, when new capacity reaches scale.

Asian demand is unlikely to offset the oversupply. Japan’s LNG imports have declined 11% since 2021 as nuclear restarts progress, while China continues to invest in domestic gas production, pipelines, and renewables.

Europe, which BCA argues never truly relied on cheap Russian gas to begin with, now stands to gain from the shift.

Cheaper gas could strengthen the competitiveness of energy-intensive sectors, particularly chemicals. “The main beneficiary of cheaper gas supply will likely be the energy-intensive chemicals sector,” the firm writes, suggesting a potential tailwind for European industrials.