Iran Conflict Disrupts Global LNG Flows, Shifts Shipments to Asia
Qatar Facility Closures and Supply Concerns Fuel Competition, Price Increases
Bloomberg
The intensifying search for Liquefied Natural Gas (LNG), sparked by conflict in the Middle East, is already altering established supply routes, with more shipments originally destined for Europe now being redirected to Asia.
According to vessel tracking data compiled by Bloomberg, at least eight shipments initially headed to Europe have been diverted to Asia since the fighting began, a trend that has accelerated in recent days. The limited availability of spare supply is quickly tightening the market, raising the prospect of increased competition and higher prices in both regions. This shift underscores the critical role of LNG in the global energy landscape.
The conflict has led to the closure of Ras Laffan in Qatar, the world’s largest LNG export facility, and has halted navigation through the Strait of Hormuz.
Bloomberg calculations based on 2025 production data indicate that each day of this disruption effectively removes approximately three Qatari LNG shipments from the market.
A smaller LNG export facility in Abu Dhabi is also currently unable to load shipments. Combined, these disruptions represent around 20% of global LNG supplies.
“If this situation continues for several months, extending into the summer, there won’t be enough alternative LNG sources to meet global market needs,” said Matthew Otting, an analyst at Rystad Energy.
The disruption to Qatari LNG supplies is reshaping the energy map, with no clear immediate solution in sight.
He added, “The other two major LNG suppliers, the United States and Australia, are already operating at almost full capacity, with limited room for increased production.”
Competition Intensifies Between Europe and Asia
Europe faces urgent pressure to secure additional LNG shipments as it seeks to replenish storage tanks that were largely depleted over the winter.
Meanwhile, unusually warm weather in parts of Asia is expected to drive increased air conditioning utilize in the coming months. Prices in both regions have risen sharply over the past week, raising concerns about inflationary pressures and economic consequences.
Buyers in India, Bangladesh, and Thailand have turned to the spot market to bolster supplies, but challenges are emerging in recent tenders for March deliveries, including some in India, which went unawarded due to a lack of sellers and significantly higher prices.
Bloomberg NEF data shows global LNG imports totaled 8 million metric tons last week, a 26% decrease compared to the previous week. During the same period, supplies fell by 16%.
U.S. Energy Unable to Immediately Fill the Gap
Additional supplies from the United States, the world’s largest LNG producer, are unlikely to bridge the gap in the near term. Even as several new facilities are under construction, new flows will come online gradually.
The Golden Pass project in Texas, a joint venture between Qatar and ExxonMobil, is nearing completion but has not yet begun operations. Cheniere Energy is also incrementally adding capacity at its Corpus Christi facility in Texas, while Venture Global is increasing production at its second Louisiana facility, Plaquemines, and building a third known as CP2.
Reduced Expectations of a Surplus
This situation has diminished expectations of an LNG supply surplus this year. Morgan Stanley analysts, including Devin McDermott, wrote in a note that any extension of Qatari LNG export outages beyond one month “will quickly lead to a supply deficit,” after the bank had previously forecast a surplus of 6 to 8 million tons this year.
Florence Schmidt, an energy strategy expert at Rabobank, paints a similar picture. With each week that Qatari production remains offline, the expected surplus decreases by 1.5 million tons, leaving only about five weeks before the market flips into a supply deficit, she said. QatarEnergy’s decision to postpone the start of a major expansion project will also put pressure on supplies in 2026.
“Markets are now facing a supply deficit even with increased U.S. Flows,” Schmidt said. “The LNG surplus has been postponed by a year.”
