World Bank forecasts sustained volatility in global gas prices

Global natural gas prices face a period of sustained volatility, driven by geopolitical tensions, supply disruptions, and shifting demand patterns, according to the World Bank's April 2026 Commodity Markets Outlook.

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The forecast was outlined in an analysis based on the April 2026 Commodity Markets Outlook, which reviewed recent trends in global liquefied natural gas markets and assessed prospects through 2027.

The report highlights how recent conflicts in the Middle East have severely affected liquefied natural gas (LNG) markets. The closure of the Strait of Hormuz, a critical route for shipments from Qatar and the UAE, triggered substantial price hikes. In March, Asia's LNG benchmark surged by approximately 94 percent, while Europe's benchmark rose by about 59 percent as countries competed for limited available cargoes.

Although prices have since eased, the World Bank warns that the market remains highly sensitive to supply shocks and geopolitical developments. The United States LNG benchmark experienced less pressure due to robust domestic production and ample storage. However, global gas demand growth has slowed to just 0.8 percent in 2025, yet supply constraints and regional competition continue to push prices upward.

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The disruption triggered sharp price increases across key markets, with Asia’s LNG benchmark rising by about 94 per cent in March, while Europe’s benchmark climbed by around 59 per cent over the same period due to intensified competition for limited LNG cargoes.

The World Bank forecasts a potential rise in natural gas prices again in 2026 before a partial easing in 2027, contingent on the recovery of Middle Eastern LNG supplies and infrastructure operations. Upside risks include ongoing geopolitical tensions, low gas storage levels in Europe, and increasing demand from energy-intensive sectors like AI data centers.

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Although prices eased in the following months, the institution warned that the market remains highly sensitive to supply shocks and geopolitical developments, with volatility expected to persist.

Europe's gas storage levels are notably below historical averages, raising concerns about its ability to meet demand during peak periods. While weaker economic growth in Asia could temper demand and ease price pressures, underlying supply risks are expected to persist. The World Bank concludes that the global gas market is entering a phase of heightened uncertainty, with supply disruptions increasingly dictating price movements over demand growth.

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The report stated that the United States LNG benchmark experienced comparatively lower pressure due to strong domestic production and ample storage capacity, helping to cushion the impact of global disruptions.