April 2026 Energy Market Overview:
Navigating Geopolitical Risk Amid Shifting Global Supply

Overview

Energy markets in Q2 2026 transitioned from the supply driven softness seen earlier in the year to a more variable environment influenced by geopolitical developments. Oil and global LNG prices moved higher as markets incorporated emerging supply risks, while North American natural gas prices eased from prior levels.

Global oil markets saw wide price movements as key shipping routes were disrupted, although supply growth from oil-producing nations outside the Organization of the Petroleum Exporting Countries (OPEC) continued to provide support to overall fundamentals. North American natural gas markets remained relatively steady, with LNG demand offering consistent offtake while higher domestic production limited upward pricing momentum. In global LNG, markets tightened after damage to Qatar’s Ras Laffan complex. While Qatar represents approximately 20% of global LNG supply, the disruption impacts only part of its total liquefaction capacity. Incremental U.S. export additions provide short-term support but do not fully offset the reduction in Qatari volumes. Over the longer term, continued liquefaction growth in the United States and Qatar is expected to reintroduce a competitive global supply landscape.

GLJ maintains its fundamentals-based view, holding the long-term Henry Hub forecast at US$4.00/MMBtu and revising the long-term real WTI forecast to US$69.00/bbl. GLJ’s base case assumes a three- to six-month resolution, although the duration of the Strait of Hormuz disruption remains uncertain. Under this assumption, elevated risk premiums are expected to moderate as shipping conditions stabilize, with the market subsequently recalibrating from a modest supply deficit rather than a structural imbalance.

The situation remains highly fluid, with pricing acutely sensitive to emerging news, and the potential for sustained structural adjustments to global supply chains cannot be discounted.

Oil Prices

Oil prices increased through Q2 2026, recovering from Q1 levels near US$55/bbl and rising above US$100/bbl during periods of elevated geopolitical risk. Forward curves shifted into backwardation from earlier contango structures, indicating tighter prompt market conditions and higher near-term risk premiums.

Market attention has centered on the closure of the Strait of Hormuz, a key transit corridor for global crude movements. While alternative export routes are available, overall capacity remains limited. Key options include Saudi Arabia’s Yanbu terminal, the UAE’s Fujairah route, and the Kirkuk–Ceyhan pipeline system, each of which offers only partial mitigation. These constraints have contributed to the increase in geopolitical risk pricing.

Despite recent volatility, underlying fundamentals indicate rising vulnerability rather than a fully supplied environment. Non-OPEC growth, primarily from Brazil, Canada, and Guyana, continues to add incremental barrels, but these additions do not fully offset Gulf-region export constraints. Although OPEC+ has agreed to increase production beginning in April 2026, it should be noted that some of this spare capacity is in countries reliant on the Strait of Hormuz, limiting their ability to deliver additional volumes if disruptions persist. Global inventories remain adequate, but an extended conflict or prolonged shipping restrictions would result in a sustained tightening of supply–demand balances.

GLJ maintains its long-term real WTI forecast at US$69/bbl, reflecting expectations for ongoing supply growth and moderate demand expansion within a balanced market framework.

Natural Gas

North American natural gas prices moderated in Q2 following strength earlier in the year. Henry Hub traded in the US$3.00–$3.50/MMBtu range, supported by steady demand and resilient supply. U.S. production remains elevated, driven in part by associated gas from oil-focused drilling programs.

While LNG Canada has increased utilization, elevated storage levels and ongoing pipeline constraints continue to weigh on AECO pricing relative to Henry Hub. At the same time, global LNG demand provides a meaningful outlet for North American supply.

Export volumes from the U.S. Gulf Coast and Canada’s West Coast remain robust, contributing to a stable medium-term outlook. GLJ continues to view North American gas markets as balanced, with LNG demand offering support while ample supply sets an effective ceiling on pricing.

Global LNG

Global LNG markets tightened in Q2 2026 due to disruptions at Qatar’s Ras Laffan complex, reducing export capacity by an estimated 12–13 million tonnes per annum (MTPA) and increasing pressure on international LNG benchmarks.

In Europe, storage levels are at historical lows as the heating season concludes, and injection season begins. Diversified supply sources have helped mitigate near-term risks despite low inventories. In Asia, exposure is more direct, with Strait of Hormuz disruptions increasing sensitivity to shipping delays and freight constraints.

Incremental U.S. volumes provide limited relief. Train 1 at Golden Pass LNG has commenced production, expected to supply approximately 6 MTPA at full utilization, with total project capacity reaching 18 MTPA once all trains are operational. However, these additions do not fully offset reduced Qatari volumes in the near term.

Looking forward, global liquefaction capacity is projected to expand significantly through the end of the decade, led by the United States and Qatar. While current disruptions may support higher prices in the short term, long-term market conditions continue to indicate increasing supply competition.