Meanwhile, Asia and Europe brace for higher LNG costs, and India turns to coal to offset lost gas supplies.

West Texas gas prices collapse to record negative levels

Spot natural gas prices at the Waha trading hub in the Permian Basin plunged as low as -$9.75 per MMBtu last week, with traders warning they could hit -$10 during upcoming pipeline maintenance. The collapse stems from infrastructure bottlenecks that leave drillers with more gas than they can move, leading to frequent flaring, which has reached five-year highs. Despite these losses, producers continue pumping because high crude prices—up 47% to nearly $100 a barrel amid the U.S.-Israel war on Iran—make oil production profitable enough to offset gas losses.

A local glut amid a global shortage

West Texas is facing oversupply and negative gas prices at the same time that global markets are tightening due to conflict in the Middle East. Iran's closure of the Strait of Hormuz and attacks on Qatar's Ras Laffan LNG facilities have disrupted shipments, affecting 17% of Qatar's exports, while global buyers compete for reduced supply. European benchmark gas futures have surged to around $20 per MMBtu, and analysts project Asian spot LNG prices could exceed $40 if disruptions persist, a situation reinforced by strong U.S. LNG export activity noted in recent market reports.

India's emergency gas rationing plan

India has enacted the Natural Gas (Supply Regulation) Order, 2026, prioritizing household and transport use while placing gas-fired power plants at the bottom of the supply ladder. This curtailment will shrink gas-based electricity output during peak summer demand, forcing reliance on coal, which currently powers most of the country's grid. Officials say coal stockpiles equivalent to 88 days of consumption, plus strong solar and hydropower, should avert blackouts, though evening demand spikes remain a risk.

What to watch in the coming weeks

In the immediate term, Texas gas prices may fall further during seasonal pipeline maintenance, while global LNG markets remain sensitive to geopolitical developments. Short-term, Europe and Asia will compete for limited LNG, potentially driving prices higher into the summer. Longer term, if Strait of Hormuz disruptions persist, structural shifts could occur: U.S. LNG exporters may see sustained demand growth, while countries like India could accelerate investment in coal and renewables to hedge against gas volatility.