Middle East conflict disrupts global LNG supply and triggers price surge

Conflict in the Middle East has significantly disrupted the global liquefied natural gas (LNG) market, causing supply shortages and price volatility. The shutdown of the Ras Laffan facility in Qatar, the world’s largest LNG export hub, and disruptions in the Strait of Hormuz have effectively removed approximately 20% of global LNG supply. Additionally, an export plant in Abu Dhabi has been unable to ship cargoes.

This supply crunch is triggering a global competition for remaining resources. Ship-tracking data indicates that at least nine cargoes originally destined for Europe have diverted to Asia. However, as spot prices surge, some Asian importers are reducing demand in favor of alternatives like coal. Conversely, European demand is rising as the region seeks to refill gas storage levels that remain below seasonal averages.

Major suppliers like Shell Plc have declared force majeure for customers in Asia due to halted Middle Eastern flows. With the US and Australia already operating at near-full capacity, analysts warn that there is little room for these nations to increase production to meet the shortfall if the disruption persists into the summer.