The recent joint U.S.-Israeli strike on Iran has added renewed volatility to global energy markets. While higher prices for crude oil and refined products are unsurprising, the implications for natural gas, particularly liquefied natural gas (LNG), are increasingly significant.

Qatar — one of the world’s top LNG suppliers — relies on shipments transiting the Strait of Hormuz. After insurance companies reportedly pulled coverage for tankers, some LNG vessels had to stop mid-route, and this disruption has caused global LNG prices to jump. In Europe, prices for April delivery on the Title Transfer Facility (TTF) surged about 38%, rising from $11.09 on Friday to $15.25 by Monday. As of March 1, European storage inventories stood near 30% full, with more withdrawals likely, pushing storage levels closer to lows seen during the COVID-19 period. Another challenge: The forward LNG price curve has once again inverted seasonally, with summer prices trading above the upcoming winter months, reducing the financial incentive for storage operators to refill inventories.

In the U.S., the near-term supply and demand balance remains largely unchanged. LNG export capacity is effectively maxed out, suggesting recent price strength reflects sympathetic movement with global energy markets rather than a fundamental domestic shift. Following the attack on Iran: 

• Natural gas prices opened 3-4 cents higher in early trading on Sunday, March 1.
• Prices climbed to about 20 cents higher by Monday morning. 
• By the end of Monday, prices ultimately settled about 10 cents higher on the day.

The more consequential impact of elevated global LNG prices may emerge during the winter period, particularly in the January-February 2027 contracts. Global LNG prices effectively establish the upper price threshold for U.S. Gulf Coast gas. In a very cold U.S. winter scenario, domestic prices sometimes must rise high enough to discourage LNG exports — and that threshold has now risen materially due to the increased risk of prolonged geopolitical conflict or damage to critical energy infrastructure involving Iran, Israel, and broader regional supply chains, including exports from Qatar.

The expiration of the prompt month (March 2026) natural gas contract was not without drama as the Chicago Mercantile Exchange ran into technical issues halting trading in the natural gas and metals contracts. Thirty days after the February 2026 natural gas contract settled at $7.46, the March 2026 contract expired at $2.969, down $4.49. This settlement reflects the change in trader sentiment moving from a very bullish posture 1 month ago to very bearish expectations. The market turnaround was primarily due to weather forecast projecting much cooler-than-normal temperatures that didn’t transpire and, in fact, verified warmer than normal. 

March heating demand expectations have continued to fade as the likelihood of additional cold air intrusions across the U.S. diminishes. While March is technically a winter month, it remains a wildcard from a storage perspective, as it can register either net withdrawals or net injections:

• March 2025 (the third warmest in 76 years) saw a net injection of about 15 billion cubic feet (Bcf).
• March 2024 (the fifth warmest in 76 years) saw a net withdrawal of about 75 Bcf.
• Under current forecast assumptions, which would place March 2026 among the top-10 warmest in 76 years, total withdrawals are projected near 20 Bcf, with the majority occurring during the first week of the month.

Total U.S. natural gas inventories are currently estimated at 1.886 trillion cubic feet (Tcf), placing storage levels 115 Bcf above year-ago balances and 43 Bcf below the 5-year average. With the end of winter in sight, end-of-season storage is now projected to slightly above 1.8 Tcf, a meaningful increase from early February expectations that indicated ending balances below 1.6 Tcf. For reference, the 5-year average storage balance coming out of the winter is 1.81 Tcf, with a high balance of 2.27 Tcf in 2024, and a low balance of 1.396 Tcf in 2022.

Power prices have largely trended with natural gas, with the similar fundamental impacts of a mild February and concerns about the recent conflict in Iran.

PJM's updated 20-year load forecast confirms electricity demand across the region is growing at one of the fastest rates in its history, driven largely by data centers, electrification, and large commercial and industrial loads. 

While PJM modestly reduced its near-term demand outlook through the early 2030s — due to improved vetting of large load requests — the long-term trajectory remains sharply higher, with summer peak demand expected to increase by roughly 85,000 megawatts (MW) over the next 15 years compared to last summer’s peak of roughly 160,000 MW.

This growth is already showing up in market outcomes: PJM’s most recent capacity auctions for the 2026-2027 delivery year cleared at the regulatory price ceiling of $329.17 MW/day, up 22% from the prior year and more than 10 times higher than prices seen just a few years ago. PJM has filed to keep the price ceiling and floor in place through May 2030. Given these forecasts and the delay in capacity auctions, it’s likely capacity prices could continue to hit the regulatory price ceiling.

Energy prices are also becoming more volatile as higher demand pushes the system closer to its operational limits during extreme weather:

• During Winter Storm Fern in January 2026, PJM prices spiked to over $2,000 per megawatt-hour (MWh).
• Similarly, during last June’s heat wave, real time wholesale power prices in PJM spiked above $1,300 per MWh in some hours, compared with typical prices below $50 per MWh.
• This illustrates how tight supply conditions can quickly translate into sharp price increases, and this isn’t isolated to any single season.

As PJM projects continued long-term load growth without a corresponding pace of new dispatchable generation, these types of price spikes and elevated capacity costs are expected to become more frequent. For commercial customers, the forecast underscores growing exposure to higher peak period energy prices, rising capacity charges, and increased volatility — making proactive procurement, hedging, and load management strategies more important than ever.