Gas
Strait of Hormuz disruption keeps global LNG markets tight
Global liquefied natural gas markets remain severely restricted as traffic through the Strait of Hormuz stays more than 75 percent below pre-war levels.
Key points
- LNG shipments through the Strait of Hormuz remain heavily suppressed nearly eight months after the onset of the Iran war.
- QatarEnergy extended force majeure on deliveries through November, with repairs on damaged liquefaction trains expected to take three years.
- European storage levels sit at 73 percent while Asian demand crumbles under soaring spot prices.
What happened
Liquefied natural gas flows out of the Middle East remain severely restricted seven and a half months after the Iran conflict blocked shipments through the Strait of Hormuz, according to OilPrice.com reporting. While crude oil exporters have increasingly utilized ship-to-ship transfers and alternative routes, LNG presents distinct technical and commercial hurdles. QatarEnergy's chief executive, Saad Sherida Al-Kaabi, noted last month that substituting maritime transport with pipelines lacks economic feasibility and would require building redundant facilities.
Why it matters
The supply constriction has pushed European benchmark gas prices and Asian spot prices to highs not seen since 2023. QatarEnergy extended its force majeure on deliveries to Europe and Asia through the end of November. Consequently, European storage facilities are at 73 percent capacity, down from over 86 percent at this time last year. Meanwhile, price-sensitive buyers in South Asia have experienced sharp demand destruction as term supplies from Qatar remain largely offline.
What comes next
Even if the Strait of Hormuz were to reopen immediately, Qatari officials indicate that production and shipments would require several weeks to normalize. Furthermore, strikes on the Ras Laffan complex in March damaged two liquefaction trains, requiring a three-year repair timeline. While the European Commission notes that the EU's gas system benefits from improved diversification and higher import capacity compared to previous years, high prices are expected to persist and weigh on industrial competitiveness.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Gas is the flexible backbone of many grids and the designated transition fuel in many national plans, from LNG trade to domestic LPG and CNG. Supply security and pricing drive both power reliability and emissions.
79.2% of electricity in Iran came from gas in 2024Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
