Mideast war driving up Europe natural gas prices, highlighting Canada's potential

Firefighters work as smoke rises outside a damaged warehouse in an industrial area in Al Rayyan, Qatar, following an Iranian strike, Sunday, March 1, 2026. (AP Photo)

CALGARY — The widening Mideast war is driving up spot natural gas prices in Europe and Asia, and while it highlights the potential for Canada to play a greater role as a stable global supplier, one economist says it’s not likely to change much in the near term.

Natural gas prices in Europe have spiked almost 70 per cent since the U.S. and Israel began their assault on Iran on Saturday, with the conflict spilling into several other countries in the region. And the gas price for northeast Asia has risen by about 50 per cent in that time frame.

“The markets are quite nervous about what will happen,” said Werner Antweiler, an energy economist at the University of British Columbia’s Sauder School of Business.

QatarEnergy, one of the world’s top suppliers of liquefied natural gas, halted production after its facilities were struck.

Tanker traffic has also ground to a halt in the Strait of Hormuz, a narrow waterway connecting the Persian Gulf with the Gulf of Oman through which 20 per cent of global LNG supplies traverse.

“The big question is how long we will see interference with that shipping lane and whether or not the situation there is a matter of a few weeks or if it’s something that actually is much more protracted,” said Antweiler.

“The markets are holding their breath here.”

Liquefied natural gas plants take a great deal of time and upfront investment to build, so they’re underpinned by long-term offtake agreements. That means Canada’s sole operating LNG export facility in Kitimat, B.C. -- a partnership between Shell and four Asian partners -- won’t be seeing a windfall from the current price spike, said Antweiler.

And he added it won’t likely change the outlook for other Canadian projects and expansions on the drawing board -- yet, anyway.

“Is this is a conflict that will permanently change the outlook? That is much harder to see because that would actually require this conflict to last literally for years as opposed to weeks or months,” Antweiler said.

“Investment decisions are for these very long time horizons. You don’t build an LNG facility unless you know that it can sell your output for the next 10, 15, 20 years to partners reliably.”

But Gabriel Giguere, senior policy analyst at the MEI think-tank said recent geopolitical crises are firming up trading partners’ interest in Canadian energy.

“The reliability and stability of Canada as an energy producer make it a partner of choice for our allies in Europe and Asia,” he said in a news release.

The think-tank has previously published a report saying Quebec has major strategic advantages as a potential site for a liquefied natural gas terminal serving European customers, which have been looking to reduce their reliance on Russian supply. It said a maritime route from eastern Quebec to northern France would take six days less than from the Gulf of Mexico.

But Antweiler said pipeline infrastructure would be needed to make such a proposal work, as the vast majority of Canada’s natural gas is produced in the West.

“It’s just cheaper to pipe it to the United States and use their infrastructure.”

This report by The Canadian Press was first published March 3, 2026.

— With files from The Associated Press.

Lauren Krugel, The Canadian Press