Kuwait Finance House (KFH) Investment: Natural Gas Spot Prices to Remain Strong and High

A report by KAMCO Invest on the performance of the natural gas market pointed to rising prices due to ongoing instability in the Middle East. The recent escalation in confrontations between the United States and Iran, alongside the tightening of a naval blockade on Iranian ports and the renewed closure of the Strait of Hormuz, has placed severe pressure on global energy markets, including natural gas prices.

The company stated in its report, “It is widely expected that global spot natural gas prices will remain strong and elevated in the near term, supported by seasonal demand increases linked to cooling needs during the summer months.”

Global natural gas prices recorded moderate growth during the second quarter of 2026. The notable exception to this trend was in the United States, where the average natural gas price fell by 7.5% year-on-year to settle at $2.95 per million British thermal units (MMBtu).

In comparison, the average natural gas price in Europe rose by 31.2% year-on-year during the second quarter of 2026, reaching $15.58 per MMBtu, while the average price of liquefied natural gas (LNG) in Japan grew by 11.3% year-on-year to reach $13.79 per MMBtu.

The price growth in Asia and Europe was primarily driven by persistent geopolitical instability and supply disruptions that affected LNG shipments transiting the Strait of Hormuz. Although price levels in these regions had retreated from their peaks recorded in March 2026, prices generally remained higher than 2025 levels. Gas prices in Europe and Asia were further supported by Europe’s ongoing structural shift away from Russian gas imports following the Russia-Ukraine conflict.

KAMCO Invest noted in its report that the interim agreement reached between the United States and Iran in June 2026, which established a framework for reopening the Strait of Hormuz, suffered a major setback following the recent resumption of hostilities between the two countries. The continued instability in the region has significantly impacted the ability to predict the resumption of LNG supplies from Gulf states via the Strait of Hormuz, as well as the conditions surrounding its reopening.

It added, “Currently, the prevailing view among market analysts is that the strait is expected to be fully reopened in the third quarter of 2026. To date, the closure of the Strait of Hormuz has reduced the volume of LNG shipments from Gulf states by 32 billion cubic meters during the first half of 2026 compared to the same period in 2025.”

According to the International Energy Agency (IEA), total LNG supply volumes to global markets from Qatar and the UAE are expected to decline by 45% year-on-year, equivalent to 55 billion cubic meters, throughout 2026. This contraction is expected to limit the growth of global LNG trade, which is likely to remain stagnant in 2026.

The ongoing regional instability has affected natural gas production and export systems in the UAE. The closure of the Strait of Hormuz has hindered UAE’s LNG exports, while its gas processing facilities have suffered damage from military strikes. According to the IEA, loading operations at the UAE’s Das Island LNG liquefaction facility slowed to just one or two shipments per month during the three-month period from March to June 2026, compared to an average of seven LNG shipments during the same period in 2025.