Is U.S. Natural Gas Entering a New Era?

When the NYMEX U.S. natural gas futures began trading in 1990, natural gas flows were limited to the extensive pipeline network throughout North America. Technological advances in liquefying natural gas (LNG) have enabled LNG to flow from producers to consumers via ocean vessels, expanding the addressable market for the U.S. energy commodity. 

Global events over the past few years have only increased the demand for U.S. LNG, which could support prices. 

The war in Ukraine increased demand for U.S. LNG

In March 2022, when Russia invaded Ukraine, it changed the global natural gas pricing structure. While natural gas had been slowly evolving from a domestic to an international commodity through liquefied natural gas exports, the war turbocharges that evolution. 

The chart shows that while the U.S. leads the world in natural gas production, Russia ranks second, with around 2.4 times as much production as third-place Iran. Western Europe had depended on the Russian pipeline network for its natural gas requirements. However, the war in Ukraine and NATO sanctions changed the equation, driving European natural gas futures prices to record highs. 

The monthly continuous chart of U.K. natural gas futures shows the price rose to a record high in March 2022. 

Natural gas prices in the Netherlands also reached record highs in March 2022. 

Sanctions on Moscow increased Western Europe’s demand for U.S. LNG. 

War with Iran has turbocharged that demand

The February 28, 2026, U.S. and Israeli attack on Iran and Iran’s aggressive regional retaliation have impacted the natural gas market. As the charts of the U.K. and Dutch natural gas futures show, prices have risen to the highest level since 2022. Given the war conditions, Iranian natural gas exports will likely slow to a trickle, sanctions remain on Russia, and attacks on Qatar, Saudi Arabia, and the UAE will limit their production and exports. Therefore, the war in Iran could turbocharge demand for U.S. LNG. 

Given the rising demand, U.S. inventories could be too low 

The longer the war continues, and the Strait of Hormuz is an unpassable chokepoint for oil and gas, the more the world will rely on U.S. LNG exports. 

U.S. natural gas inventories across the U.S. stood at 1.848 trillion cubic feet for the week ending on March 6, 2026. The stockpiles were 8.3% above the previous year, but 0.9% below the five-year average for early March. As the temperatures rise over the coming weeks, the natural gas withdrawal season will end, and stocks will begin to climb. However, if European and Asian prices remain high as the wars in Iran and Ukraine continue, demand for U.S. LNG could soar, creating shortages. While there are global above-ground strategic petroleum reserves, there are no strategic natural gas or LNG above-ground reserves. Therefore, given the changing market dynamics, U.S. natural gas inventories could be too low.

U.S. energy policy supports U.S. LNG dominance

The Trump administration’s “drill-baby-drill” and “frack-baby-frack” energy policy could relieve some of the pressure on oil and gas markets. However, the situation in Iran and around the Strait of Hormuz could increase U.S. LNG dominance, forcing the U.S. to produce more oil and gas over the coming months. The U.S. economy will benefit from rising LNG and oil exports at higher prices, but it creates a double-edged sword, as U.S. consumers will pay more for their energy requirements, pushing inflationary pressures higher. 

The midterm elections could change the path of U.S. energy policy

The U.S. midterm elections will determine the current administration’s ability to dominate policy over the second half of President Trump’s second term. U.S. energy policy could shift towards the previous administration if Democrats capture control of the House of Representatives and Senate. 

A quick and successful resolution to the war in Iran will favor Republicans, while U.S. voters have limited patience, and a prolonged war could cause a victorious tsunami for Democrats in November 2026. The bottom line is that the war in Iran is a critical factor in U.S. energy prices and policies, as the U.S. is now energy independent. While energy independence is positive for supply, it does not shield the U.S. from rising prices. 

Natural gas entered a new era after Russia’s 2022 invasion of Ukraine. The war in Iran and Iran’s regional retaliation only exacerbate the changes for the energy commodity.