Middle East conflict redraws global gas trade map
he fragile equilibrium of the global natural gas market – which had spent much of the early 2025/2026 heating season trending toward stability – has been shattered by the geopolitical eruption in the Middle East.
According to the International Energy Agency’s (IEA) Gas Market Report, Q2-2026, a series of unprecedented disruptions—top of which is the de facto closure of the Strait of Hormuz—has altered the trajectory of international energy trade. What was once anticipated as a year of easing fundamentals and “strong LNG supply growth” has instead devolved into a period of “unprecedented uncertainty” that threatens to delay the next global LNG wave by at least two years, the IEA said.
Decreased volumes are just part of the picture; it’s the total restructuring of supply routes and the re-emergence of extreme price volatility that brokers and charterers need to take note of.
The report states that “the loss, for the time being, of almost 20% of global LNG supply has caused strong price volatility, driving up natural gas prices in both Asia and Europe to their highest levels since the 2022/23 energy crisis”. For trade partners and industrial consumers, the implications of this is that the era of predictable, softening prices seen in late 2025 has ended, replaced by a “major supply shock to regional and global gas markets”, according to the IEA.
The Strait of Hormuz serves as the world’s most critical artery for liquefied natural gas. In 2025, approximately 110 billion cubic meters (bcm) of LNG—nearly 20% of global trade—transited this waterway, according to IEA figures. However, the effective closure of the strait in March essentially “reduced the combined LNG production of Qatar and the United Arab Emirates by close to 10 bcm for the month”. The IEA notes that while global deliveries initially fell by only 2% in March due to shipping lag times, the “full impact of the disruption” began to manifest in April, with deliveries plunging 10% year-on-year in the first twenty days of that month.
This paralysis has created a divergence in regional trade dynamics. While Europe’s direct exposure to Hormuz is relatively limited—less than 10% of the strait’s LNG was destined for European shores in 2025—Asian markets are “disproportionally shouldered” by the impact, said the IEA. The report highlights that “almost 90% of the volumes that exited the Persian Gulf via the Strait of Hormuz were destined for Asia, accounting for more than 25% of the region’s total LNG imports”.
Markets such as Pakistan, Bangladesh, and India, which relied on these volumes for over half of their imports, have seen their trade flows “slow to a trickle”.
Perhaps the most damaging outcome for long-term trade planning is the destruction of energy infrastructure in the region. The IEA warns that “damage from attacks on LNG liquefaction facilities in the Middle East is altering the medium-term outlook”. Specifically, strikes on Qatari facilities could “reduce the country’s LNG output by nearly 70 bcm by 2030, assuming a repair period of four years”. When combined with delays to the North Field East expansion project, the conflict has already caused a “loss of around 120 bcm of cumulative LNG supply for the period 2026-2030”.
This leads to a depressed forecast for global trade balance: the expected “LNG wave”—a period of projected oversupply that was supposed to keep prices low for the remainder of the decade—is now expected to be delayed “by at least two years”. The IEA points out that “the losses resulting from the Middle East conflict account for around 15% of the expected global LNG supply over the 2026-2030 period”. While new projects in North America and Africa, such as the Plaquemines LNG plant in Louisiana, are working to fill the gap, they are currently “offsetting the declines” rather than creating the surplus markets had anticipated.
The current crisis has exposed the vulnerabilities of a global trade system reliant on a few narrow geographic chokepoints. The IEA emphasises that the energy crisis “highlights the need to further strengthen the architecture of global gas supply security”.
From a trade perspective, this means a shift away from over-reliance on spot markets toward a “diversified portfolio of long-term contracts”, which can “mitigate short-term price variability both for buyers and sellers through sophisticated pricing formulae”.
Governments are already reacting to this new reality with emergency trade measures. The report notes that “in early April, Australia and Singapore issued a Joint Statement on Economic Resilience and Essential Supplies to support the flow of essential goods including LNG”. Simultaneously, the US Department of Energy authorised increased exports from the Plaquemines and Elba Island plants to both free trade and non-free trade agreement countries to “boost LNG deliveries” to allies.
The “major supply shock” of the Middle East conflict has not only spiked prices but has effectively “distorted short-term gas market fundamentals” for years to come, concludes the IEA. The focus must now remain on the “duration of the effective closure of the Strait of Hormuz”, as each passing month results in another 10 bcm of lost supply, further tightening the noose on global energy trade.
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