The combined effect of short-term supply losses and slower capacity growth could result in a cumulative loss of around 120 billion cubic metres of LNG supply between 2026 and 2030, according to the International Energy Agency (IEA).
The losses resulting from the Middle East conflict will account for around 15% of the expected global LNG supply in the next four years.
While new liquefaction projects in other regions are expected to offset these losses over time, the impact will prolong tight markets through 2026 and 2027.
Global LNG production fell by 8% (or 4 bcm) year-on-year in March and loadings from Qatar and the UAE dropped by 9.5 bcm compared with last year. Virtually all Qatari and UAE LNG volumes that had loaded before the start of the war had been delivered by the end of March, the IEA reports.
© IEA
Each subsequent month of closure of the Strait of Hormuz leads to an approximate 10 bcm reduction in LNG supply.
In addition to the disruption of LNG flows via the strait, the damage caused to Qatar’s LNG liquefaction infrastructure has reduced the outlook for global LNG supply growth over the medium term and is expected to delay the effect of the unfolding LNG wave by at least two years.
The damage caused by attacks on Qatar’s LNG facilities could reduce the country’s LNG output by nearly 70 bcm by 2030, assuming a repair period of four years. In addition, delaying the North Field East expansion project could reduce LNG supply by close to 20 bcm over the period, according to the IEA.
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 and prompting an adjustment in natural gas demand.
North American LNG supply grew by about 35% year-on-year (or 24 bcm) over the winter period, accounting for nearly 90% of net global incremental supply. Driving growth were Plaquemines LNG’s two trains and the as well as .
A separate paper from think tank Chatham House states that the crisis shows the EU’s carbon pricing “is the right approach”. Since the war started, the EU has paid an additional €24bn for fossil fuel imports.
In response, the European Commission released the on Wednesday. The package contains a wide range of non-binding measures aimed at addressing rising energy costs and reducing dependency on volatile fossil fuel markets.
While the package’s influence is likely to remain limited, given most fiscal policy remains national and the measures are non-binding, it is a welcome step. “Crucially, it maintains the push towards decarbonisation using existing market-based instruments such as carbon pricing, through which Brussels can exert most influence,” it notes.
