1 hour ago
26
Since US and Israeli strikes on Iran began on February 28, 2026, the Strait of Hormuz has been largely shut to liquefied natural gas shipments. That narrow waterway normally handles about 20% of global LNG supply, primarily from Qatar and the UAE. With it blocked, developing nations across Asia are staring down an estimated $7 billion increase in LNG costs.
Qatar’s export collapse and Asia’s supply crisis
Qatar, the world’s largest LNG exporter, has been the hardest hit producer. Before the conflict, the country was shipping roughly 80.9 million tons of LNG annually. By April 2026, monthly exports had collapsed to around 1 million tons, down from an average of 6 to 8 million tons per month.
QatarEnergy’s Ras Laffan complex sustained physical damage that has knocked out 17% of Qatar’s total export capacity. Repairs are expected to take 3 to 5 years.
Monthly LNG imports across Asia dropped to 18.74 million tons in April, a six-year low. China, Japan, and South Korea, the region’s three largest importers, all faced drastic reductions in available supply.
Spot LNG prices tell the story in a single data point. Pre-conflict, Asian spot cargoes were trading around $10 to $11 per million British thermal units. By mid-2026, prices had surged to between $20 and $27 per MMBtu, levels the market hadn’t touched since early 2023 when Europe was scrambling to replace Russian pipeline gas.
The scramble for alternatives
With Qatari volumes effectively off the table for the foreseeable future, Asian buyers have turned to the United States. US LNG exports to Japan and South Korea initially surged in the weeks following the conflict’s escalation, though volumes have since stabilized as available cargo capacity found its ceiling.
QatarEnergy itself is now negotiating long-term contracts to purchase US LNG to fulfill existing customer obligations that it can no longer meet from its own production.
At $20-plus per MMBtu, some developing Asian buyers including Bangladesh, Pakistan, and smaller Southeast Asian importers are simply priced out of the spot market. Nations that had been transitioning away from coal are reconsidering that timeline, while others are accelerating investments in renewable energy.
Structural shift, not a blip
The physical damage to Qatar’s Ras Laffan complex ensures that a significant chunk of global LNG capacity stays offline until at least 2029. Before the conflict, Qatar’s massive North Field expansion was set to cement its dominance of global LNG trade for the next decade. Meanwhile, new LNG projects in Mozambique, Canada, and additional US Gulf Coast terminals are seeing renewed investor interest as buyers diversify away from concentration risk.
Japan had already been quietly restarting nuclear reactors. South Korea’s energy transition plans assumed relatively affordable LNG as a bridge fuel for another decade or more. At current prices, that bridge just got a lot more expensive to cross.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
English (US) ·