Key facts
- Roughly 20% of global LNG supply is now considered interruptible due to the Strait of Hormuz crisis.
- LNG exports from Qatar and the UAE remain severely constrained.
- Buyers are diversifying supply sources to include Canada, Mozambique, Indonesia, Papua New Guinea, and Argentina.
- The crisis has sent LNG prices in Asia and Europe soaring.
- China is exploring options to reduce its exposure to Gulf supply, despite being a top customer of Qatar.
- The value of more reliable LNG supply has increased.
The ongoing crisis in the Strait of Hormuz has fundamentally altered the global liquefied natural gas (LNG) market, with approximately 20% of global supply now viewed as interruptible. This situation, persisting for nearly seven months, has severely constrained LNG exports from Qatar and the UAE.
In response, buyers in Europe and Asia are actively seeking supply routes that bypass the Strait of Hormuz, exploring options from Canada, Mozambique, Indonesia, Papua New Guinea, and Argentina. This diversification drive reflects a broader shift in priorities, with energy security now outweighing the long-held belief in cheap, fixed-term supply from a limited number of sources. Analysts at Wood Mackenzie noted that the market now views supply behind the straits as 'interruptible,' feeding market volatility and complicating contracting decisions.
The crisis has also sent LNG prices in Asia and Europe soaring to levels not seen since the 2022 energy crisis. Europe faces significant supply challenges ahead of winter, while price-sensitive Asian buyers are scrambling for alternatives, increasing coal use and accelerating renewable energy targets to mitigate future supply crunches and high import costs.
China, a major LNG customer of Qatar, is reportedly in talks with exporters outside the Persian Gulf to reduce its exposure to the region. Despite existing long-term deals with Qatar, Beijing is exploring options for deliveries starting before 2030. Similarly, Southeast Asian importers are accelerating renewable energy buildouts, with Thailand launching a 10-gigawatt solar power scheme to reduce its reliance on gas imports, as stated by Energy Minister Akanat Promphan.