Natural Gas: Outlook for the Rest of 2025

Source: Google Maps

As we enter late 2025, the natural gas market stands at a critical juncture, shaped by global demand shifts, policy moves, and emerging risks. Here’s a forward-looking snapshot:

LNG Exports on the Rise With an ENSO-neutral pattern moderating temperatures, U.S. LNG exports are set to rise. Europe, contending with halted Russian transit through Ukraine, is driving that demand. New U.S. projects — Plaquemines, Corpus Christi Stage 3, Golden Pass (expected online by November per EIA) — will expand export capacity by 2.1 Bcf/d. Meanwhile, LNG Canada has delivered its first cargo, further cementing North America’s role.

EU-US Tariff Negotiations Active EU-US tariff discussions could accelerate U.S. LNG exports, as Europe’s import capacity has jumped more than a third since 2021. But with high European spot prices, Asia may still need to compete aggressively for U.S. cargoes. (Columbia CGEP)

Domestic Dynamics In the Permian, lower rig counts tied to range-bound oil prices could cap associated gas output. Meanwhile, AI-powered data centers are striking gas deals to fuel their electricity needs. ERCOT projects an 11% surge in Texas demand for 2025–2026, driven by AI and electrification (EIA STEO).

Risks to Watch

• US-China Tariff War: Beijing halted U.S. LNG imports since February, risking demand erosion (OilPrice).

• China’s Economy: Slower growth could dampen LNG pull.

• AI Boom: Rapid AI expansion might strain gas-fired power, risking price spikes and public backlash.

• Geopolitical Shifts: The Ukraine conflict — or the unthinkable scenario of sudden global peace — could drastically disrupt gas flows and reshape demand.

  
  

Natural gas is balancing on a knife’s edge between opportunity and uncertainty. Staying adaptable will be critical.

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