Why Strait of Hormuz disruption is more severe for global LNG markets than for oil
Global Liquefied Natural Gas (LNG) markets are bracing for a period of sustained price elevation throughout 2026 as the ongoing closure of the Strait of Hormuz continues to throttle supply.
A new report from BCA Research highlights that even under a scenario where the strategic waterway reopens by May, global LNG exports are projected to decline by at least 6% this year due to the war.
The supply shortfall represents a significant constraint for energy-importing nations, though the structural outlook suggests a more balanced landscape beginning in 2027.
Rationing and the Asian demand response
The impact of the supply crunch is being felt most acutely in Asia, where major consumers are being forced to navigate a difficult adjustment.
The Strait of Hormuz serves as a primary artery for Persian Gulf LNG, and importing nations are increasingly turning to a combination of energy rationing, heightened reliance on coal-fired power generation, and spot-market purchases to bridge the gap.
Analysts note that for these spot purchases to remain viable, global natural gas prices must stay well below the peaks seen during the 2022 energy crisis, as the market balances scarcity against the risk of rapid demand destruction.
A structural shift in capacity from 2027
While the immediate outlook is dominated by uncertainty and price pressure, the medium-term forecast offers a clearer path toward stabilization.
Significant global LNG capacity additions, spanning from the U.S. and Qatar to Canada and Senegal, are set to come online starting in 2027.
The expanding projects are expected to provide a substantial cushion to the global market, moving the industry from its current state of tightening toward a period of large potential surpluses by 2028.
The current environment necessitates a cautious approach to energy-intensive sectors and gas-dependent utilities.
While the short-term headwinds are undeniable, the structural expansion of global liquefaction capacity suggests that the current price spikes may be transitory.
As the market looks past the 2026 disruption, the focus will likely shift to how quickly these new capacity projects can scale to meet global demand.
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