WMO expects Pacific sea surface anomalies above 2.9C through August-October and a November peak, which would make this the strongest El Niño in the modern record.
But it is a clear picture of how a modern grid actually fails, and it lands just as the strongest El Niño in the modern record spins up on the other side of the world.
The canal is absorbing spillover from one energy crisis while El Niño quietly drains it.
The caveat sits in NOAA’s own reasoning: El Niño years tend to push whatever activity does form toward the Gulf Coast and the subtropics.
Add it up and JPMorgan figures the combination of El Niño and war-inflated energy prices could slow the global disinflation trend by about 0.3 percentage points next year.
The real damage is on the supply side: hydropower, solar output, reactor cooling and Panama Canal drafts, all hitting a system Hormuz has already stripped of slack.
The mild-winter relief traders are pricing doesn’t close Europe’s LNG gap. Rystad still has the region needing roughly 15 million tonnes more year-on-year through June 2027.
WMO expects Pacific sea surface anomalies above 2.9C through August-October and a November peak, which would make this the strongest El Niño in the modern record.
Romania spent more than 2 million euros this month detonating rocks and sinking barges in the Danube, trying to shove enough water toward the Cernavoda nuclear plant to keep its reactors cool. It didn’t work.
On Aug. 13, Nuclearelectrica began a controlled shutdown of the plant’s second reactor, the first time drought has taken Cernavoda fully offline since 2003. That is about a fifth of Romania’s electricity. Dacia and Ford idled their Romanian factories to free up power for everyone else.
Europe’s drought has its own drivers and the equatorial Pacific isn’t one of them. But it is a clear picture of how a modern grid actually fails, and it lands just as the strongest El Niño in the modern record spins up on the other side of the world.
The World Meteorological Organization said in late July that the event will keep intensifying through August-October, with sea surface temperature anomalies in the central and eastern equatorial Pacific expected to exceed 2.9 degrees Celsius and peak in November.
For scale, 2015-16 topped out near 2.6 C, 1997-98 at 2.4 C and 1982-83 at 2.1 C.
A positive Indian Ocean Dipole is developing alongside it, which tends to sharpen drought and fire risk around the Indian Ocean basin.
Worth knowing: WMO doesn’t use the phrase "super El Niño." It isn’t an operational classification, however thoroughly the term has come to cover it.
Most of the market has filed this under bearish for gas. Mild winter, softer heating demand, a little breathing room for European buyers.
Rystad Energy’s estimates don’t support that, though.
European winter temperatures would need to run at least 2 C above average before the region’s LNG demand falls back to last winter’s level, and that has happened twice in 25 years.
Rystad’s base case has storage at 76 percent on Nov. 1 and Europe needing roughly 15 million tonnes more LNG year-on-year through June 2027, with Qatari volumes still constrained by the war.
A moderate El Niño narrows the gap to about 7 million tonnes. It doesn’t close it.
The damage that matters is on the supply side, and it runs through water.
Hydropower takes the first hit.
Colombia draws up to 70 percent of its electricity from hydro, and during the 2015-16 event reservoir levels dropped 60 to 70 percent. Its reservoirs are already running behind target this year. Ecuador was rationing power through the last drought cycle. Roughly half of Latin America’s generation is hydro, which leaves the region more exposed to a shift in Pacific rainfall than anywhere else on earth.
Solar isn’t immune either…
A study published in March in Communications Earth & Environment found El Niño cuts surface radiation precisely where solar capacity is growing fastest, with losses near 5 percent in California and up to 10 percent in parts of southeastern China during the strongest events.
India is the sharpest version of the problem. CREA modeled the La Niña to El Niño transition from July 2026 through June 2027 and found weaker wind and hydro output colliding with roughly 10 terawatt-hours of additional cooling demand, leaving a generation gap near 18 TWh.
Coal is the obvious filler. In the harshest scenario the think tank ran, extra coal generation reaches 24 TWh, about half of India’s entire increase in coal burn last year. Peak demand there already hit a record 270 gigawatts this summer.
Then there is the chokepoint...
The Panama Canal cut its Neopanamax draft limit twice more this month, the fourth and fifth reductions of 2026, with Gatun Lake sitting just above 84 feet in early August and projected near 83 by September. The authority is also throttling hydro generation at Gatun Dam to conserve water.
The timing is awkward: transits ran 5.2 percent higher through the first nine months of fiscal 2026, driven partly by LPG carriers rerouted away from Hormuz. The canal is absorbing spillover from one energy crisis while El Niño quietly drains it.
It’s not all bad news, though…
NOAA’s Aug. 6 update put the odds of a below-normal hurricane season at 75 percent, up from 55, calling for seven to 13 named storms and no more than two majors. Every strong El Niño since 1950 has produced a below-normal Atlantic season.
For Gulf of Mexico production and the Gulf Coast export terminals now carrying an outsized share of global supply, that is worth real money. The caveat sits in NOAA’s own reasoning: El Niño years tend to push whatever activity does form toward the Gulf Coast and the subtropics. Both storms this season formed in the Gulf.
Add it up and JPMorgan figures the combination of El Niño and war-inflated energy prices could slow the global disinflation trend by about 0.3 percentage points next year.
WMO’s next full ENSO update lands in early September. "The predictions are rather solid," said Roberta Boscolo, the agency’s climate and energy lead.
By Michael Kern for Oilprice.com
More Top Reads From Oilprice.com
