Global trade in LNG will exceed $120 billion this year, taking it past iron ore as the most valuable commodity after oil, Goldman Sachs Group Inc. said.

Competition will increase because the spot market is expanding and buyers are less reliant on long-term contracts, analysts including Jeff Currie in New York wrote in an emailed report on March 5. The U.S. will supply more LNG in the next several years, giving Asia, the biggest consuming region, more bargaining power, the analysts said.

About 73% of global LNG is sold under long-term contracts generally linked to oil with a time lag of as long as nine months, Most of the rest is sold as spot cargoes in Asia, where prices fell 55% in the past year. LNG trade will grow at an average annual rate of 5.1% from 2014 to 2025 as production starts from the U.S. to Australia and new markets emerge in Asia, the Middle East and the Baltic region, BG Group Plc, which has a fleet of about 25 LNG carriers, said Wednesday.

“As contract and spot prices diverge, oil-indexation will continue to lose its appeal,” Goldman said. “There is a window for LNG to grow and become a normal commodity that is priced according to its own fundamentals rather than those of different, if related, commodities.”

LNG contracts have traditionally been linked to oil prices, such as Brent or the Japan Crude Cocktail that represents various grades the country buys. As oil rises or drops, so does the price of delivered cargoes. By contrast, supplies from the U.S. will be tied to benchmark natural gas prices at Henry Hub in Louisiana.

Spot Prices

Spot prices for LNG delivered to Asia will fall to $6.25 per million Btu in third-quarter 2015, and rise to $7 next year, according to Goldman. They slid 45% in 2014 as benchmark crude prices slumped amid a supply glut in the oil market, and were at $7.60 on March 2, according to data compiled by Bloomberg from New York-based Energy Intelligence Group.

The market will require spot prices to remain at a significant discount to oil-indexed contracts as new projects begin operation, Goldman said in the report.

Planned liquefaction capacity increases in Australia and the U.S. will outpace demand growth of 5% a year and keep global utilization rates below the recent average, even as the long-term outlook remains positive, according to Goldman.

“In order to balance the market, LNG prices will have to decline further post 2016 until they can challenge thermal coal in the fuel mix of the power sector, with Europe playing the role of the swing consumer and the U.S. as the marginal supplier in the Atlantic basin,” the analysts wrote in the report.