Global Gas Price Volatility Persists as World Bank Warns of Prolonged Market Instability
The World Bank has warned that global natural gas markets are heading into a prolonged period of instability, with prices expected to remain highly volatile due to ongoing geopolitical tensions, supply disruptions, and shifting global energy demand. In its latest Commodity Markets Outlook analysis, the institution said the energy market is becoming increasingly unpredictable, with external shocks now playing a bigger role than steady demand growth.
The report highlighted that recent conflicts in the Middle East—particularly disruptions affecting the Strait of Hormuz, a key shipping route for liquefied natural gas (LNG)—have already triggered major price swings. Asia’s LNG benchmark reportedly surged by about 94%, while Europe saw prices climb around 59% as competition for limited supply intensified across major importing regions.
While the United States gas market experienced comparatively less pressure due to strong domestic production and robust storage capacity, the global picture remains fragile. The World Bank noted that overall gas demand growth has slowed sharply, rising by just 0.8% in 2025, yet supply constraints continue to keep prices elevated and highly reactive to shocks.
Looking ahead, the institution projected that gas prices could rise again in 2026 before easing slightly in 2027, depending on how quickly supply from key exporting regions recovers. However, it warned that risks remain tilted toward further increases, including low storage levels in Europe, ongoing geopolitical tensions, and rising electricity demand from emerging sectors such as artificial intelligence-powered data centres.
Overall, the World Bank said the global gas market is entering a new phase where volatility is no longer temporary but structural. Unless supply chains stabilise and new production capacity comes fully online, global gas price volatility is likely to remain a defining feature of the energy landscape well into the medium term.
source: punch