Mayank Bansal, CFA
Mayank Bansal is a CFA Charterholder and heads the Equity Research team at Kapitales Research, with over 5 years of experience analysing global equity markets. He leads fundamental, data-driven research combining rigorous financial analysis with macro trends.
Could Iran War and AI Demand Push Global Natural Gas Prices Even Higher?
Highlights:
Global Natural Gas Market Faces Severe Supply Constraints
Global natural gas markets are experiencing significant supply pressures as the ongoing Iran conflict disrupts Middle Eastern exports while expanding artificial intelligence infrastructure increases electricity requirements. Asian liquefied natural gas (LNG) prices have more than tripled during 2026, highlighting growing competition among major energy-importing economies.
The Japan-Korea Marker, a key Asian LNG benchmark, recently exceeded US$31 per million British thermal units (MMBtu), briefly surpassing US$33 compared with approximately US$9 in January. European and Asian buyers are competing for limited shipments, creating additional pressure on international energy markets.
Iran Conflict Disrupts LNG Production
According to International Energy Agency (IEA) estimates, the Middle East conflict eliminated approximately 60 billion cubic metres of LNG supply between March and October 2026.
Although increased production from the United States and Africa compensated for roughly two-thirds of these losses, substantial shortages remain. The IEA anticipates global LNG output declining 3% in 2026, potentially marking the sharpest annual contraction on record.
QatarEnergy's extended export disruptions have further complicated supply conditions, increasing dependence on alternative producers.
AI Expansion Creates Additional Energy Demand
Rapid investment in artificial intelligence and data centres is introducing another significant demand driver for natural gas. Technology companies require reliable electricity to operate increasingly energy-intensive computing infrastructure, strengthening interest in gas-fired generation alongside renewable energy sources. Shell's LNG Outlook 2026 projects global LNG demand could expand approximately 65% between 2026 and 2050, reflecting expectations of sustained consumption growth.
Outlook: Could Supply Shortages Continue Into 2027?
Natural gas markets could remain constrained throughout 2027 as geopolitical uncertainty, infrastructure limitations and expanding electricity consumption challenge supply availability. Although elevated prices may encourage fuel switching and reduce demand, persistent requirements from industrial consumers and power generators could limit the adjustment.
Future price movements will depend heavily on Middle Eastern export recovery, additional LNG capacity and the pace of AI-related electricity demand. Until supply conditions improve, global energy markets may remain exposed to considerable volatility.
Note- All data presented is based on information available at the time of writing.
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