Reduced flows through the Strait of Hormuz have kept global liquefied natural gas (LNG) prices at elevated levels and widened the gap between U.S. domestic gas prices and international markets.
This is stated in a report by the U.S. Energy Information Administration (EIA).
According to the report, the conflict in the Middle East and restrictions in the Strait of Hormuz have removed roughly 20% of global LNG supply from the market. As a result, market conditions have tightened and global LNG production has declined by 8% year-on-year.
In April, U.S. LNG export capacity increased by approximately 0.9 billion cubic feet per day. In the first quarter of the year, U.S. natural gas production averaged 120.2 billion cubic feet per day, up 4% compared to the same period last year.
The report notes that U.S. natural gas production is expected to continue rising through 2027, supported by high oil prices, which incentivize both oil and gas output.
Projections indicate that U.S. electricity demand will rise by 1.3% this year to around 4,250 billion kilowatt-hours, with an additional 3.1% increase expected by 2027.
In the residential sector, electricity prices are forecast to rise by about 5% this year before growth slows. At the same time, utility-scale solar generation is expected to increase by 1.4%.
