LNG supply disruption will be ‘immediate and immense’
HALTING LNG flows through the Strait of Hormuz would be just as bad for gas and LNG markets as for oil, analysts have warned.
State-owned QatarEnergy said on Monday it has halted production of LNG after Iranian attacks on its Ras Laffan and Mesaieed gas facilities.
Ras Laffan is the world’s biggest LNG plant.
Lloyd’s List Intelligencedata shows an average of six LNG carriers passing the Strait of Hormuz each day in February, but none on Sunday. There were 12 LNG carriers at Ras Laffan Anchorage at noon on Monday.
Around 81m tonnes (110bn cu m) of LNG transited the Strait of Hormuz in 2025, mostly from Qatar, according to consultancy Wood Mackenzie.
WoodMac said disruptions to Qatar’s LNG flows could tighten the global market and reignite competition between Asia and Europe for available cargoes.
Vortexa associate LNG market analyst Florence Yu said: “Unfortunately there’s no spare capacity in the LNG market, so the disruption in the LNG market will be immediate and immense.”
Yu said 20% of global LNG and over 90% of Qatar’s LNG exports pass through the Strait of Hormuz. Qatar is the world’s second-biggest exporter, responsible for 20% of supply.
Asian buyers would be most exposed, since 25% of Asia’s total LNG deliveries transited, and 30% of China’s total deliveries.
85% of Qatari cargo lands in Asia and 12% goes to Europe. Yu said China, India, Taiwan and South Korea were the importers at most risk.
A regional war could mean Qatar cutting or pausing upstream gas production.
Israel has already suspended gas exports to Egypt, causing the country to seek replacement LNG cargoes. Iran’s gas exports to Türkiye could also be cut, further increasing Türkiye’s LNG demand.
“That is just not good for Europe right now, because the EU gas storage is dangerously low, standing 35% below their five-year average,” Yu said.
That is the lowest level since the 2022 gas crisis.
“They have very little buffer for any significant supply shock,” Yu said.
WoodMac said global additional LNG supply was expected to exceed 35m tonnes this year, while demand from Asia was relatively subdued.
The market has appeared broadly balanced, with prices of just under $11/mmbtu, or €31 per megawatt hour.
WoodMac said a halt in LNG flows through the Strait of Hormuz would be comparable in scale to the curtailment of Russian gas supplies to Europe four years ago. That caused prices to jump to nearly $100/mmbtu at their peak — equivalent to $600/bbl Brent — and $40/mmbtu on average in 2022.
“This time, however, the reaction will hardly be as extreme as the closure of the Strait of Hormuz is likely to be temporary,” WoodMac said.
Losing about 1.5m tonnes (2.2 bcm) a week of LNG exports through the Strait of Hormuz would force Asian and European markets to draw more heavily on existing storage and increase the need for more restocking over the summer.
“The market would remain tight well beyond the resumption of trade via the Strait,” WoodMac said.
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