Published on 03 August 2026

Share:

Natural Resources Market Update H2 2026: Midstream

Published on 03 August 2026

Midstream is entering a gas-driven growth phase, with LNG expansion reshaping global demand and infrastructure priorities.

INDUSTRY OUTLOOK

The global midstream sector is increasingly gas-weighted, with LNG driving the next phase of infrastructure growth. Global LNG supply is forecast to increase over 7% in 2026, marking one of the fastest expansions since 2019. This is the start of a broader LNG "supercycle", with more than 150 mtpa of additional capacity expected by 2030, led by the US and Qatar. As new supply comes online, global gas demand is expected to accelerate (by just under 2% growth in 2026), particularly in Asia. With export capacity expanding rapidly and a major new global LNG supply wave underway, the midstream sector is now very much focused on gas logistics and LNG infrastructure rather than crude transport. From a commodity perspective, gas markets are rebalancing but remain well supported by structural demand growth, particularly from LNG exports. Prices are expected to remain in the ~USD3.3–USD4.3/MMBtu range through 2026–2027, supported by rising consumption but moderated by higher production and storage levels. In contrast, the oil market outlook is more uncertain, with demand growth softening and macroeconomic pressures weighing on prices and upstream investment. This divergence reinforces a more constructive outlook for gas weighted midstream assets, particularly those with exposure to LNG export infrastructure and power demand growth.

Data centres and electrification are creating incremental gas demand, and utilities are seeing sustained load growth after decades of stagnation, which is pushing investment into gas pipelines (especially in the Permian to Gulf Coast in the US), storage, and processing capacity, and last mile connectivity to power generation.

Although we are seeing a strong investment cycle, it is a lot more disciplined, similar to what we are seeing in the upstream energy market. Most companies are avoiding mega projects and focusing on smaller debottlenecking expansions.

There are some major new LNG capacities coming online with Golden Pass having started up in March, Plaquemines ramping up, and more FLNG projects gaining traction such as Delfin. This means there will be a huge need for feed gas pipelines, gather and processing. LNG is rewiring global gas flows, and midstream sits at the centre.

This is being supported by most governments increasingly viewing midstream as the key to energy security infrastructure and using it for strategic decisions in geopolitics. Permitting delays are still a major issue and there is ESG scrutiny influencing capital flows along with the impact on trade and tariffs, but the bottom line remains that we are in a growth phase and this is continuing to attract M&A and private capital.

INSURANCE MARKET UPDATE

The midstream insurance market remains highly competitive. In H1 2026, capacity has continued to expand, with entrants from both upstream and downstream markets seeking diversification and incremental market share. Strong recent sector performance, combined with low loss volatility, has supported pricing improvements and a broader underwriting appetite.

While the upstream market has for some time seen an influx of underwriters competing for lead positions, this dynamic is increasingly evident in the midstream sector, both among London-based carriers and in international markets.

London written standalone midstream business remains predominantly North America focused. However, this is expected to diversify with the growth of FLNG exposures. Outside of large, capacity-driven risks, Middle Eastern and small- and mid-sized international placements continue to be largely dominated by domestic insurers. Traditional LNG risks are still typically placed within downstream markets, although upstream underwriters with established midstream portfolios are increasingly seeking to expand their remit, subject to treaty and corporate constraints. For example, we have seen a degree of softening in prior ESG related restrictions for some Canadian business.

The majority of standalone midstream business written in London is still predominately North American focused; however, with increasing FLNG risks, this will diversity. Outside of the larger capacity risks, much of the small and midsized international business is dominated by domestic markets. Traditional LNG is often written by the downstream markets, but more upstream underwriters writing a midstream book are trying to expand where their treaties and corporate policy allow, with many also softening on previous ESG stances for example.

Underwriting scrutiny remains concentrated on key risk areas, including infrastructure integrity (particularly for ageing assets), natural catastrophe exposure, testing and commissioning/start-up phases, and critically, operational interdependency across integrated systems. Given the volume of recent M&A activity in the midstream sector and increasing limit requirements from insureds, aggregation and clash exposure are receiving heightened attention.

Despite ongoing softening, the midstream market continues to exhibit more discipline than the upstream market. Rate reductions on well-performing risks are generally in the -10% to -15% range, with a parallel focus on increasing limits and enhancing wordings. Many placements this year have shown elevated BI/CBI to PD ratios, which have not deterred underwriters, given the continued demand for premium amid pressure from new entrants, reduced line sizes, and M&A driven premium erosion. There has also been a noticeable rise in the availability of multi-year agreements, although in recent weeks some markets have begun to resist renewal structures incorporating these features if there are no break provisions. Notwithstanding this, alternative capacity remains readily available for most programmes.

Looking ahead, no immediate shift in the midstream cycle is expected over the next six months. However, by mid-2027, we anticipate a potential tightening in appetite. This is driven by the shared portfolios with either upstream or downstream clients, where an uptick in loss frequency and severity observed in early 2026 may, over time, begin to temper the current soft market trajectory.