EIA Raises Henry Hub to $3.67 for 2026 as Hormuz Crisis Drives TTF-Henry Hub Gap to $14.85 Per MMBtu

The U.S. Energy Information Administration raised its Henry Hub natural gas price forecast for 2026 to $3.67 per million British thermal units in its July 7 Short-Term Energy Outlook, up from $3.60 in the prior month's STEO. Henry Hub spot futures were trading at $2.943 per MMBtu in early Wednesday trading, up $0.019 (0.65 percent), per OilPrice.com market data with an 11-minute delay. The gap between the EIA's annual average forecast and today's spot price means Henry Hub would need to average significantly higher through the second half of 2026 to meet that projection. EIA also lifted its 2027 Henry Hub forecast to $3.49 per MMBtu, from $3.46 in June.

Record Permian Output and Rising LNG Demand Drive the Revision Higher

The EIA attributed the upward revision to record U.S. natural gas production, led by growth in the Permian Basin's associated gas output, combined with rising power-sector demand. U.S. LNG exports are forecast at 17.4 billion cubic feet per day for 2026, rising to 18.6 Bcf per day in 2027, per the STEO. The agency noted that inventories remain above the five-year average for much of the forecast period, "helping limit upward price pressures." Devon Energy and other major Permian operators have contributed substantially to the associated gas volumes driving that production record.

A $14.85 Per MMBtu Chasm Between US and European Gas Prices

Dutch TTF natural gas futures were trading at $17.79 per MMBtu as of approximately July 14, 2026, per OilPrice.com data carrying a two-day delay, up $1.48 (9.04 percent) on that day. That places the Henry Hub-TTF spread at $14.85 per MMBtu. Each billion cubic feet per day of U.S. LNG export capacity represents roughly $5.4 billion in annual gross price differential at that spread. With 17.4 Bcf per day of planned U.S. LNG exports in 2026 per the EIA, the combined gross differential reaches $94.3 billion per year. That figure is before U.S. liquefaction fees and Atlantic Basin shipping costs, which typically total $4 to $6 per MMBtu.

Asian LNG Japan-Korea Marker futures were trading at $16.66 per MMBtu as of approximately July 14, also per OilPrice.com two-day delay data. That creates a comparable $13.72 spread versus Henry Hub for Pacific Basin deliveries. U.S. Gulf Coast LNG exporters, including Sabine Pass and Freeport LNG, can direct cargoes toward either European or Asian buyers depending on which arbitrage is most favorable on any given day. The combined Atlantic and Pacific demand pull is a structural tailwind for Henry Hub prices that the EIA's revised forecast begins to incorporate.

Qatar Suspension Amplifies Demand for US LNG Cargoes

Rystad Energy's Lu Ming Pang confirmed this week that Qatar has not dispatched an LNG vessel through the Strait of Hormuz since the July 7 attack on the Al Rekayyat Q-Flex carrier. The Qatar maritime suspension of Ras Laffan shipments first reported by Oil Authority on July 13 has pushed TTF higher as European buyers scramble for alternative supply. U.S. Gulf Coast terminal operators are positioned to absorb a portion of that diverted demand, supporting domestic gas prices well above the $2.94 spot level seen Wednesday. Prolonged Hormuz disruption effectively increases the addressable market for U.S. LNG output, a factor not fully captured in the EIA's July 7 modeling assumptions.

EBW Analytics Flags Downside Risk From Weather and Production Growth

Eli Rubin of EBW Analytics Group offered a bearish counterpoint to the EIA's upward revision. "If weather weakens more, LNG stays subdued, and production rises, further downside may be ahead for NYMEX gas," Rubin said, per Rigzone reporting. The warning focuses on near-term domestic fundamentals: milder temperatures reduce power-sector gas burn, the largest swing variable in summer natural gas demand. EBW's concern is rooted in domestic weather and supply dynamics, distinct from the international disruption now reshaping European and Asian gas markets.

Record Drilling Efficiency Drives the Production Surge EIA Cited

The record U.S. natural gas production the EIA cited as justification for its upward revision reflects efficiency gains accelerating across both the Permian and Appalachian basins. EQT Corporation set a U.S. onshore lateral drilling record at 29,070 feet on July 13 with its Longwell 9H well in Wetzel County, West Virginia, deepening the supply base the EIA modeled. Longer laterals reduce per-unit Appalachian production costs, compounding the domestic supply overhang that has held Henry Hub spot prices below $3 per MMBtu through mid-July. That same cost-efficiency, however, is also what enables U.S. producers to profitably expand exports into the TTF gap.

The EIA's July 7 STEO was built on the assumption that the U.S.-Iran MOU signed June 17 kept the Strait of Hormuz open for commercial navigation. That assumption is now under severe strain as U.S.-Iran military strikes entered their fifth consecutive day on Wednesday. For Henry Hub, the net effect is constructive: a prolonged Qatar LNG outage and higher European demand for U.S. cargoes could push second-half 2026 prices well above the $3.67 annual average the EIA projects. Whether EBW's weather downside or the Hormuz supply shock proves more decisive will determine whether the EIA forecast holds or gets revised sharply higher.