Coal Market Shifts Could Tighten US Natural Gas Supply

While Middle East tensions have not directly impacted US natural gas futures like they have global benchmarks, the Iran war’s influence on coal markets could eventually affect the Henry Hub, says Jamie Heard, Vice President of Capital Markets at Tourmaline.

The Permian Basin’s production is currently weighing on Henry Hub prices, keeping them under pressure. However, Heard highlights a potential shift in demand due to coal-switching, which could add around 2.5 billion cubic feet per day (Bcf/d) to US natural gas demand.

This potential increase in demand stems from the economic impact of the Iran war on coal markets, which may lead to a shift toward natural gas in some regions. The knock-on effects could tighten the US natural gas market over time.