Global natural gas markets are likely to remain under strain through 2027 after the Middle East conflict disrupted LNG flows, damaged export infrastructure and delayed the supply expansion that was expected to ease prices this year.
The International Energy Agency’s latest quarterly gas assessment points to a sharp reversal in market conditions after shipping through the Strait of Hormuz was severely disrupted from the start of March. The route normally handles close to a fifth of global LNG supply, making any prolonged disruption a direct threat to energy security in Europe and Asia.
The supply shock has removed significant volumes from the market, pushed gas prices in Europe and Asia to their highest levels since January 2023 during March volatility, and forced importers to compete more aggressively for flexible cargoes. The IEA expects tight conditions to last through 2026 and 2027, as damaged LNG liquefaction infrastructure in Qatar reduces projected supply growth and pushes back the expected global LNG supply wave by at least two years.
The combined effect of short-term supply losses and delayed capacity growth could cut cumulative LNG supply by about 120 billion cubic metres between 2026 and 2030. That loss has changed the outlook for buyers who had expected new projects in North America, Canada and Africa to bring relief after a difficult post-2022 energy cycle.
Before the March disruption, gas markets had been moving towards a more balanced position. Global LNG trade rose by 12% year on year between October and February, helped by new liquefaction capacity and strong output from North America. Benchmark prices in Europe and Asia declined by roughly a quarter over that five-month period, easing pressure on utilities, industry and governments.
That trend shifted when the Middle East conflict led to the effective closure of Hormuz to LNG cargoes. Global LNG production fell by 8% year on year in March, with steep declines from Qatar and the United Arab Emirates only partly offset by additional supply from other producers. Deliveries weakened further in April as disruption spread through shipping schedules and supply chains.
Qatar’s role is central to the pressure on the market. Damage to its liquefaction facilities has reduced export capacity, while repair timelines remain uncertain. Qatar is one of the world’s largest LNG exporters, and any lasting decline in its output has implications far beyond the Gulf, especially for buyers in Europe, Japan, South Korea, China and South Asia.
The United States has helped cushion the immediate blow by raising LNG exports to record levels. Shipments from US terminals reached about 32.15 million tonnes in the first four months of 2026, a 28% increase from the same period last year. Additional American volumes have more than offset the fall in Qatari loadings so far, with terminals such as Sabine Pass and Plaquemines playing a larger role in global supply.
That buffer may not hold without interruption. US export facilities have been running at high utilisation rates and will need maintenance, while the Atlantic hurricane season adds another risk for Gulf Coast terminals. Any drop in American output could expose the market to tighter conditions, particularly if Asian demand strengthens before Europe rebuilds winter inventories.
Europe faces a difficult storage season. Gas inventories are unusually low after a colder winter, with storage around 31% full, the lowest level for this time of year since 2022. Reaching the European Union’s 90% winter storage target would require a 13% increase in LNG imports compared with 2025, a demanding task when global supplies are constrained and prices remain high.
European regulators expect the bloc may reach only an 80% filling level, a threshold allowed under difficult market conditions, but at a higher cost and with greater vulnerability to supply shocks. Storage typically covers up to a third of Europe’s winter gas demand, making replenishment a priority before colder months return.
Higher prices are already affecting consumption. European gas demand fell by about 4% year on year in March, helped by stronger renewable power generation and softer demand from some industrial users. Several Asian economies have also turned to fuel switching, conservation measures and demand-side curbs to reduce exposure to expensive LNG.
The International Energy Agency’s latest quarterly gas assessment points to a sharp reversal in market conditions after shipping through the Strait of Hormuz was severely disrupted from the start of March. The route normally handles close to a fifth of global LNG supply, making any prolonged disruption a direct threat to energy security in Europe and Asia.
The supply shock has removed significant volumes from the market, pushed gas prices in Europe and Asia to their highest levels since January 2023 during March volatility, and forced importers to compete more aggressively for flexible cargoes. The IEA expects tight conditions to last through 2026 and 2027, as damaged LNG liquefaction infrastructure in Qatar reduces projected supply growth and pushes back the expected global LNG supply wave by at least two years.
The combined effect of short-term supply losses and delayed capacity growth could cut cumulative LNG supply by about 120 billion cubic metres between 2026 and 2030. That loss has changed the outlook for buyers who had expected new projects in North America, Canada and Africa to bring relief after a difficult post-2022 energy cycle.
Before the March disruption, gas markets had been moving towards a more balanced position. Global LNG trade rose by 12% year on year between October and February, helped by new liquefaction capacity and strong output from North America. Benchmark prices in Europe and Asia declined by roughly a quarter over that five-month period, easing pressure on utilities, industry and governments.
That trend shifted when the Middle East conflict led to the effective closure of Hormuz to LNG cargoes. Global LNG production fell by 8% year on year in March, with steep declines from Qatar and the United Arab Emirates only partly offset by additional supply from other producers. Deliveries weakened further in April as disruption spread through shipping schedules and supply chains.
Qatar’s role is central to the pressure on the market. Damage to its liquefaction facilities has reduced export capacity, while repair timelines remain uncertain. Qatar is one of the world’s largest LNG exporters, and any lasting decline in its output has implications far beyond the Gulf, especially for buyers in Europe, Japan, South Korea, China and South Asia.
The United States has helped cushion the immediate blow by raising LNG exports to record levels. Shipments from US terminals reached about 32.15 million tonnes in the first four months of 2026, a 28% increase from the same period last year. Additional American volumes have more than offset the fall in Qatari loadings so far, with terminals such as Sabine Pass and Plaquemines playing a larger role in global supply.
That buffer may not hold without interruption. US export facilities have been running at high utilisation rates and will need maintenance, while the Atlantic hurricane season adds another risk for Gulf Coast terminals. Any drop in American output could expose the market to tighter conditions, particularly if Asian demand strengthens before Europe rebuilds winter inventories.
Europe faces a difficult storage season. Gas inventories are unusually low after a colder winter, with storage around 31% full, the lowest level for this time of year since 2022. Reaching the European Union’s 90% winter storage target would require a 13% increase in LNG imports compared with 2025, a demanding task when global supplies are constrained and prices remain high.
European regulators expect the bloc may reach only an 80% filling level, a threshold allowed under difficult market conditions, but at a higher cost and with greater vulnerability to supply shocks. Storage typically covers up to a third of Europe’s winter gas demand, making replenishment a priority before colder months return.
Higher prices are already affecting consumption. European gas demand fell by about 4% year on year in March, helped by stronger renewable power generation and softer demand from some industrial users. Several Asian economies have also turned to fuel switching, conservation measures and demand-side curbs to reduce exposure to expensive LNG.
Topics
World