Global LNG prices set for 3-year high on Asia demand, Europe inventory crunch
Synopsis
Morgan Stanley is forecasting a 30-per-cent-plus surge in Asian LNG benchmark prices to $25/mmBtu by Q3-Q4 2025 — the highest since the post-Russia supply shock of early 2023. With Europe's gas stockpiles sitting 25 per cent below their 10-year average and the Strait of Hormuz disrupting Gulf exports, the global gas market is heading into a tighter second half than most traders had priced in.
Key Takeaways
Morgan Stanley forecasts Asian LNG benchmark prices rising to $25/mmBtu in Q3-Q4 2025 , up more than 30 per cent from current forward levels.
That would be the highest LNG price since early 2023 , when Europe last scrambled for supply after Russian pipeline cuts.
Disruption around the Strait of Hormuz is constraining exports from Qatar and the UAE .
Europe's gas inventories are 17 per cent below last year and roughly 25 per cent below the 10-year average .
Global LNG supply in May 2025 was only about one million tonnes lower than a year earlier, cushioned by new North American export capacity.
Demand is recovering in India and China , with above-normal summer temperatures expected to lift cooling-related consumption further.
Global liquefied natural gas (LNG) prices are forecast to reach their highest levels in more than three years, propelled by recovering demand across Asia and an urgent need for Europe to rebuild depleted gas inventories before winter, according to a report by Morgan Stanley.
The Forecast
Morgan Stanley projects the Asian LNG benchmark price to climb to $25 per million British thermal units (mmBtu) in the third and fourth quarters of 2025 — a rise of more than 30 per cent over current forward market levels. If realised, that would mark the highest price since early 2023, when European nations scrambled to source LNG as a substitute for curtailed Russian pipeline gas supplies.
Strait of Hormuz Disruption Adds Pressure
The brokerage noted that LNG prices are likely to stay elevated even if Middle East tensions ease in the near term. Ongoing disruption around the Strait of Hormuz — a critical corridor for exports from major producers Qatar and the United Arab Emirates — has significantly impacted global LNG flows. This comes amid a broader tightening of energy supply chains that has kept traders on edge throughout 2025.
Asia Demand Rebounds, Europe Faces Storage Deficit
Natural gas consumption has begun recovering in key Asian markets, including India and China, while European buyers face growing urgency to shore up reserves. Weaker global LNG imports during March and April had temporarily cushioned the impact of supply disruptions, but demand has since rebounded with the onset of summer and heightened storage concerns. Weather forecasts pointing to above-normal temperatures across parts of Asia in June and July are expected to further lift LNG consumption for cooling.
Supply Side: New Capacity Limits the Damage
Despite supply challenges in the Persian Gulf region, global LNG availability has been partially offset by higher output from facilities in other regions and the addition of new export capacity in North America. As a result, global LNG supply in May 2025 was only around one million tonnes lower than the same month last year, according to the report.
Europe's Inventory Gap
In Europe, gas demand weakened last month, but storage levels remain significantly below historical norms. Inventories are estimated to be 17 per cent lower than a year ago and roughly 25 per cent below the 10-year average — a deficit that underscores the scale of purchases Europe will need to make in the months ahead to avoid a supply squeeze heading into winter.
Point of View
A structural European storage deficit, and a simultaneous Asian demand rebound rarely arrive together. What the report does not fully address is the asymmetry of risk — if Hormuz tensions ease quickly and North American supply ramps faster than expected, the $25/mmBtu forecast could overshoot. For India, which is both a growing LNG importer and a country still building out its gas infrastructure, a sustained price spike at this level would pressure import bills and complicate the Centre's energy transition calculus.
NationPress
25 Jul 2026
Frequently Asked Questions
Why are global LNG prices expected to rise in 2025?
LNG prices are forecast to rise due to a combination of recovering demand in Asia, Europe's urgent need to rebuild gas inventories ahead of winter, and supply disruptions caused by tensions around the Strait of Hormuz. Morgan Stanley projects the Asian benchmark could reach $25/mmBtu in Q3-Q4 2025, up more than 30 per cent from current forward levels.
What is the Morgan Stanley LNG price forecast for 2025?
Morgan Stanley forecasts the Asian LNG benchmark price at $25 per million British thermal units (mmBtu) during the third and fourth quarters of 2025. That would represent a rise of more than 30 per cent from current forward market levels and would be the highest price since early 2023.
How does the Strait of Hormuz disruption affect LNG supply?
The Strait of Hormuz is a critical export route for major LNG producers Qatar and the United Arab Emirates. Ongoing disruption in the area has significantly impacted global LNG flows, tightening supply even as demand recovers, according to the Morgan Stanley report.
How low are Europe's gas inventories ahead of winter?
Europe's gas storage levels are estimated to be 17 per cent lower than a year ago and roughly 25 per cent below the 10-year average, according to the report. This deficit is expected to drive significant additional LNG purchases in the coming months.
Has new LNG supply helped offset the disruptions?
Partially. Higher output from facilities outside the Persian Gulf and new export capacity added in North America have cushioned the supply shortfall. Global LNG supply in May 2025 was only around one million tonnes below the level recorded in May 2024, limiting the immediate price impact.
