Hormuz shock clouds global LNG outlook

Global gas markets face a deeper supply squeeze after the International Energy Agency estimated that conflict in the Middle East could remove about 120 billion cubic metres of liquefied natural gas from world supply between 2026 and 2030, a loss equal to roughly 15% of expected LNG availability over the period.

The warning marks a sharp reversal for a market that had been preparing for a wave of new liquefaction capacity from North America, Africa and other suppliers. LNG supply growth had been expected to accelerate in 2026 at the fastest pace since 2019, with production rising by more than 7%, or over 40 bcm, largely driven by the United States, Canada and Mexico.

The immediate pressure point remains the Strait of Hormuz, the narrow Gulf waterway linking major energy exporters to global markets. Disruption to transit through the channel has cut LNG supplies from Qatar and the United Arab Emirates by more than 300 million cubic metres a day since 1 March, equivalent to more than 2 bcm every week.

Ras Laffan in Qatar, the world’s largest liquefaction complex, has been offline since it was attacked on 2 March, compounding the effect of shipping disruption. Regional gas production has also been hit by the shut-in of oilfields, reducing associated gas output and tightening feedstock availability for export plants.

The IEA’s estimate includes both near-term supply interruptions and medium-term losses from damaged infrastructure, delayed repairs and deferred expansion projects. The closure of Hormuz has already cut combined LNG supply from Qatar and the UAE by about 20 bcm, while the restart of idled liquefaction capacity could take several weeks, trimming output further under normal operating assumptions.

The agency’s assessment also points to longer-lasting constraints. Damage to Qatari production lines could reduce the country’s LNG output by nearly 70 bcm by 2030 if repairs take about four years, while delays to the North Field East expansion could remove about another 20 bcm from supply between 2026 and 2030.

The crisis has hit a chokepoint that carried more than 110 bcm of LNG in 2025. About 93% of Qatar’s LNG exports and 96% of the UAE’s LNG exports moved through Hormuz last year, representing almost one-fifth of global LNG trade, with no alternative route available for these volumes.

Asia is most exposed. Nearly 90% of LNG shipped through Hormuz in 2025 was bound for Asian markets, accounting for more than a quarter of the region’s total LNG imports. Europe received just over 10%, but its exposure remains indirect through spot-market competition, higher prices and storage-replenishment pressures.

Before the conflict escalated, natural gas markets were moving towards looser conditions after the shocks triggered by Russia’s invasion of Ukraine. Global LNG production rose by almost 7%, or 38 bcm, in 2025, with supply growth concentrated in the second half of the year. The Plaquemines LNG plant in Louisiana alone accounted for more than 60% of the increase.

Demand growth had also weakened. Global gas consumption rose by about 1% in 2025, equivalent to around 40 bcm, as high LNG prices, weaker industrial activity and greater renewable generation weighed on use across Asia and other major consuming regions.

That balance has now shifted. Asian gas prices have risen sharply as buyers compete for replacement cargoes, while supply constraints have forced demand-side measures, including rationing in some countries. The price response reflects Asia’s greater dependence on LNG moving through Hormuz and the limited ability of importers to switch fuels quickly without affecting power generation, industry and fertiliser production.

The disruption also reinforces the growing role of the United States in global LNG trade. More than 80 bcm a year of liquefaction capacity reached final investment decision in the United States in 2025, and the country’s share of the global LNG market is expected to rise from about 25% in 2025 to around 33% by the end of the decade.