The global gas supply is facing a significant crunch, driven by the war in the Persian Gulf and a surge in demand from the AI boom. LNG spot market prices in Asia have tripled since the start of the year, with the Japan-Korea Marker reaching $31 per million British thermal units this month, up from just over $9 per mmBtu in January. The conflict has removed one of the top three LNG exporters, Qatar, from the market, creating a supply gap that even record U.S. exports have struggled to fill.
The International Energy Agency (IEA) estimates that the war has cost the world 60 billion cubic meters in LNG supply losses over the past eight months. While higher production in the U.S. and Africa has helped, the IEA warns that global LNG production will decline by 3% this year, the steepest annual drop on record. This comes as demand expectations rise due to the AI-driven construction of data centers, which rely heavily on natural gas for power.
Shell's LNG Outlook 2026 predicts a 65% surge in LNG demand between this year and 2050, despite the disruption in Qatari exports. QatarEnergy has secured long-term supply deals with U.S. companies, signaling confidence in the resilience of LNG demand. However, Energy Intelligence suggests that the war-related price surge could temporarily dampen demand, though historical patterns indicate that any decline would be limited and short-lived.
Global gas consumption has decreased by just 1% over the first nine months of the year, evidence of the inelasticity of demand. Unfortunately, the outlook for coal is also optimistic due to its lower cost compared to gas, raising concerns about emissions.