Global Gas Prices Hit Multiyear Highs Amid Supply Disruptions

Global gas prices have reached multiyear highs driven by a combination of geopolitical disruptions, the expansion of AI infrastructure, and the start of the winter heating season. A prolonged closure of the Strait of Hormuz has disrupted 20% of the global LNG supply, leaving European storage levels at 72%, significantly below the 90% target. This shortage has forced Europe to compete with Asian markets for available cargoes.

In the United States, the International Gas Unit reports that the AI-driven data center boom is creating unprecedented competition for gas. Because the national electrical grid lacks the capacity to meet new demand, AI infrastructure is shifting toward on-site electricity generation powered by gas, which competes directly with LNG exports.

While China has acted as a market buffer by reducing imports and re-exporting cargoes, other LNG-reliant nations such as India and Pakistan are experiencing severe supply disruptions. These pressures may lead to the first annual decline in global natural gas demand since 2022 due to demand destruction in those regions.