July 2026 Energy Market Overview
Energy Markets in Transition: Security, Supply and Structural Change 

Overview

Global energy markets entered the second half of 2026 amid heightened geopolitical uncertainty following disruptions to Middle Eastern energy exports. Although the reopening of the Strait of Hormuz has eased immediate supply concerns, recent events have highlighted the vulnerability of critical oil and LNG trade routes and reinforced the importance of energy security.

Despite recent price volatility, underlying market fundamentals remain constructive. North American natural gas markets continue to benefit from abundant supply, while ongoing investment in upstream production, LNG export capacity, and transportation infrastructure is expanding global energy supply and improving market resilience over the medium term.

GLJ maintains a fundamentals-based outlook, with the long-term Henry Hub forecast remaining at US$4.00/MMBtu and the long-term real WTI forecast at US$69.00/bbl. While geopolitical risk premiums may persist in the near term, our base case assumes they will gradually moderate as additional oil and LNG supply comes online and global energy flows continue to normalize.

Oil Prices

Oil prices experienced significant volatility during Q2 2026, recovering from lows near US$55/bbl earlier in the year to above US$100/bbl as geopolitical tensions escalated. Although prices have moderated following the reopening of the Strait of Hormuz, the disruption demonstrated how quickly supply risks can tighten prompt markets.

Global oil remined robust. According to the Energy Institute Statistical Review of World Energy 2026, consumption reached approximately 103 million bbl/day in 2025. The United States remained the world's largest producer at nearly 21 million bbl/day, which is a level comparable to the combined production of Saudi Arabia and Russia. China's gasoline and diesel demand declined for a second consecutive year as electric vehicle adoption accelerated, although overall oil demand continued to grow.

The supply outlook is expected to improve. Production growth from the United States, Canada, Brazil, and Guyana is expected to continue, while the United Arab Emirates' departure from OPEC provides greater flexibility to increase production following years of capacity expansion. Together with OPEC+'s gradual unwinding of voluntary production cuts, these developments are expected to increase global supply and gradually reduce current geopolitical risk premiums.

GLJ continues to expect long-term oil markets to remain broadly balanced, supported by moderate demand growth and expanding global production capacity.

Natural Gas

North American natural gas prices moderated following earlier strength, with Henry Hub generally trading between US$3.00 and US$3.50/MMBtu. Robust U.S. production, supported by associated gas from oil-directed drilling, is expected to keep North American supply well balanced.

According to the Energy Institute's Statistical Review of World Energy 2026, global natural gas consumption increased approximately 1.6% in 2025, with growth concentrated in Europe, North America, and the Middle East. The report also notes that U.S. LNG exports increased 27% year-over-year, strengthening the country's position as the world's largest LNG exporter.

With LNG Canada operating near full Phase 1 capacity, Western Canadian natural gas has gained an important new source of demand. Pipeline constraints and ample North American supply continue to limit AECO pricing relative to Henry Hub. LNG exports are expected to provide sustained support by diversifying market access and reducing reliance on traditional U.S. export markets.

GLJ continues to view North American gas markets as broadly balanced, with growing LNG exports providing demand support while strong shale production limits sustained price upside.

Global LNG

LNG is projected to play an increasingly significant role in global energy markets as countries diversify supply sources and strengthen energy security. The United States has further expanded its position as the world's largest LNG exporter, while Europe continues to replace Russian pipeline gas with LNG imports. At the same time, China is diversifying its natural gas supply through a combination of pipeline imports and LNG, reflecting broader efforts to improve supply flexibility.

Global LNG markets tightened during Q2 2026 following disruptions at Qatar's Ras Laffan complex and shipping constraints through the Strait of Hormuz. As Qatar supplies approximately 20% of global LNG, even partial disruptions supported international LNG prices and highlighted the concentration of global LNG export capacity.

Although the reopening of the Strait has eased immediate logistical constraints, the disruption reinforced the value of supply diversification. Looking ahead, expanding liquefaction capacity in the United States, Qatar, and Canada is expected to increase global supply through the remainder of the decade, supported by the continued operation of LNG Canada near full Phase 1 capacity, and the startup of Golden Pass LNG. While geopolitical risks may continue to support prices in the near term, additional export capacity is expected to improve market balance and increase market liquidity.