The war in the Middle East has led to a sudden disruption in the market with the de facto closure of the Strait of Hormuz to LNG tankers.
According to the International Energy Agency (IEA), the repercussions of the war in the Middle East on liquefied natural gas (LNG) production will be felt for at least two years, and the market will remain “tight” in 2026 and 2027. Damage to gas liquefaction infrastructures, particularly in Qatar, is expected to delay the impact of global LNG production expansion by at least two years.
The IEA warns that the collective effect of short-term supply losses and slowing capacity growth could result in a cumulative loss of around 120 billion cubic meters of LNG between 2026 and 2030. The report further highlights the need to strengthen global LNG supply security by investing in the entire value chain and enhancing international cooperation between producers and consumers.
Due to the disruption in the Strait of Hormuz, global production has decreased by 8% annually, especially evident in reduced exports from Qatar and the United Arab Emirates, partially offset by increased production in other regions.
The disruptions have started to affect global supply chains, leading to a drop in LNG deliveries, with a more pronounced decline observed in April. Prior to the war, the market was expanding with the deployment of new liquefaction capacities, particularly in North America, which helped reduce prices. However, the war, which deprived the market of about 20% of LNG stocks that previously passed through the Strait of Hormuz, has pushed prices to their highest since January 2023, resulting in a decrease in demand as some major consuming countries have taken steps to reduce consumption.
