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Home Energy Natural Gas By Irina Slav - Sep 26, 2026, 6:00 PM CDT Global gas markets could remain tight until at least next summer, with the Iran war disrupting Gulf LNG exports and already causing demand destruction. Europe is increasingly outbidding Asia for scarce LNG to rebuild depleted storage, pushing gas prices sharply higher and prompting some power generators to switch back to coal. Europe faces an especially difficult supply outlook, as restricted Gulf LNG, the upcoming Russian LNG ban and regulatory tensions with major suppliers compound its dependence on expensive imports.
Global natural gas supply is likely to remain tighter than it should be until next summer at least, and it could cause prolonged demand destruction. Should this scenario materialize, it would deliver a severe blow to Europe, as it already struggles to cover its winter gas needs ahead of the official start of heating season—but Asia won’t be happy about it, either. The prediction comes from the International Gas Union, an industry association that covers 90% of the world’s gas producers.
“The market right now is saying that they see the conflict getting prolonged,” IGU’s secretary general Menelaos Ydreos told Reuters this week. “Europe is starting to outbid Asia because they need to refill storage levels,” the executive added, noting that the price surge in natural gas has already destroyed some demand, but it is as of yet unclear whether this is a temporary dip or it could evolve into permanent destruction. Chances are it is the former, based on a recent report by Global Energy Monitor that found countries in Southeast Asia were still building natural gas-fired power plants despite the price inflation in gas caused by the Middle East war.
Asian countries are also building more LNG import capacity, despite the price surge. “There is some short-term demand destruction. The question is whether it rebounds after everything settles or whether there are some longer-term implications around policy,” Ydreos told Reuters, voicing what must be a legitimate worry in the gas industry about the outlook for demand.
Goldman Sachs is not too concerned about the long-term future of gas demand, however. In a report this week, the investment bank painted an optimistic scenario for this winter, saying prices in Europe could drop from around 70 euro per MWh to 50 euro per MWh if the flow of liquefied natural gas out of the Persian Gulf improves. The chances of that happening may be slim, but it appears Goldman Sachs makes its price estimates under the safe assumption that these chances are never zero.
Be that as it may, Goldman’s analysts still expect European gas prices to average 70 euro per MWh, which is equal to some $80. The forecast is significantly higher than an earlier one, in which Goldman’s commodity analysts expected winter gas prices at between 30 and 60 euro per MWh. “Exports of LNG from the Persian Gulf are still only at an estimated 15%–25% of their levels from before the outbreak of war between Iran and the US and Israel in February 2026.
In the absence of an improvement in exports through the Strait of Hormuz, European gas prices need to increase in order to outcompete importers of LNG elsewhere in the world,” the bank’s co-head of Global Commodities Research. “If others stop buying, there is more left to come to Europe,” Samantha Dart explained. More gas may be coming to Europe to fill those storage caverns, but power generators are switching to coal in further evidence that gas is becoming difficult to afford for one of the world’s largest import regions.
Reuters reported this week that coal consumption by power utilities in Europe could rise by as much as 25% over the next six months, as gas prices surge to the highest in three years this month, hitting 80 euros per MWh. Over the 30 days to September 24, European benchmark gas prices have added more than 17%, according to data from EnergyRiskIQ. In relief for Asian gas importers, there will soon be more Russian LNG available for them.
The European Union earlier this year approved a ban on Russian LNG imports, to take effect from January, which means flows from Yamal LNG would be redirected and, according to the IGU’s Ydreos, they could be sold at a discount. This, of course, would tighten the supply base for Europe, but the European Union’s leadership has made it clear repeatedly that its geopolitical priorities come first, and the bloc should be prepared to bear the cost of pursuing those priorities. There is, however, another priority that is at odds with gas supply security, and this is the EU’s climate change agenda.
“We're for regulations, but they have to be achievable, practical and incentivise compliance,” the head of the International Gas Union told Reuters. “If regulations go far beyond that and make it extremely difficult for the industry to comply, they'll look for other regions to send their product,” he added, possibly referring to the EU’s methane regulation that prompted a strong reaction from both Qatar and the United States. The two biggest LNG suppliers to the EU have said repeatedly they would not comply with the regulation that requires tracking every gas molecule to make sure it was produced with care for emissions.
With Qatar temporarily off the stage, the U.S. remains Europe’s only hope for LNG supply, whatever the cost, including in climate regulation adjustments. By Irina Slav for Oilprice.com More Top Reads From Oilprice.com U.S. to Back Argentina’s First LNG Export Project With $6 Billion Loan Just One Commodity Vessel Left the Strait of Hormuz on Wednesday Europe’s Gas Prices Jump as Hormuz Standoff Drags On Download The Free Oilprice App Today Back to homepage Irina Slav What I Cover Irina Slav has been writing about global energy markets since 2007, covering the oil and gas industry, energy security, commodities, and the... More Info Leave a comment EXXON Mobil -0.35 Open 57.81 Trading Vol. 6.96M Previous Vol. 241.7B BUY 57.15 Sell 57.00
