Gulf conflict disrupts energy markets: limited impact on North America

The outbreak of war in Iran and its rapid escalation into the wider region have disrupted crude oil and natural gas flows from the Gulf, affecting as much as 20% of global crude oil and LNG supply.

Crude oil prices reacted swiftly, reaching their highest levels since the 12-day War back in June 2025. Expectations of a swift resolution and resumption of flows through the Strait of Hormuz have so far contained the increase, with WTI prices for the front month up just under 7% versus Friday.

Should the conflict continue, and as transit through the Strait remains halted, supply and demand balances will tighten further. To date, the region´s oil infrastructure has not been a primary target; any change to this would introduce additional volatility to oil markets.

Global natural gas markets saw a sudden rise in prices due to concerns over the halt of flows through the Strait of Hormuz and the potential targeting of regional LNG infrastructure. Gas markets in Asia and Europe, two regions heavily dependent on the global LNG market, saw prices increase by 42% and 72%, respectively.

Asian consumers, including China, which rely heavily on Gulf LNG, are now under pressure to source supply elsewhere following Iranian strikes on QatarEnergy facilities. Natural gas prices in European markets, which depend on LNG for nearly 40% of their gas supply, have been driven up by the prospect of intense price competition with Asian buyers.

Markets in North America have seen a more limited impact on domestic prices. Front-month natural gas prices rose by around 3.5% on Monday, reflecting indirect exposure to global market conditions rather than direct supply disruption.

On the supply side, North America is a net exporter of natural gas, with domestic production sufficient to cover consumption and support the region’s growing export capacity – providing meaningful insulation from Middle Eastern supply disruptions.

On the demand side, US and Canadian LNG export terminals are already operating near capacity, with US facilities running at roughly 97% of liquefaction capacity (18.7 bcf per day of feed gas demand vs. capacity of 19.2 bcf per day).

Capacity is projected to increase modestly to roughly 21.8 bcf per day by June, which is unlikely to materially alter the regional supply and demand balance or significantly increase North America's exposure to global price movements.

The impact on electricity markets has been similarly modest in North America, reflecting the increase in natural gas prices and some concerns over the spike in oil prices and their consequences for generation and transmission costs.

The situation remains fluid, with both sides signaling a possible escalation in the intensity of the war; the risk to the region´s oil and gas infrastructure, which has so far remained largely out of the conflict, warrants close monitoring. Further updates will follow as the situation develops.

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