The Strait of Hormuz has been effectively closed to LNG cargoes since March, and the consequences are now visible in every major gas market on the planet.
The International Energy Agency’s latest quarterly report puts numbers to what traders already felt: close to 20% of global LNG supply pulled from circulation in a matter of weeks, benchmark prices in Asia and Europe climbing to levels not seen since January 2023, and demand in key importing regions contracting in response. Qatar and the UAE, two of the world’s largest LNG exporters, have seen sharp export declines that production increases elsewhere haven’t come close to covering. Global LNG output fell 8% year-on-year in March. April looks worse.
The timing compounds the damage. Heading into this year’s disruption, markets had been moving in the right direction. Between October and February, global LNG trade grew 12% year-on-year, driven by new North American liquefaction capacity. European and Asian benchmark prices had dropped roughly 25% over the same period. The tightness of recent winters was easing. That rebalancing is now on hold.
Cold weather in North America, Europe, and East Asia had already tested supply flexibility during the 2025/26 heating season, reinforcing what policymakers tend to rediscover each winter: gas systems without reserve capacity and diversified sourcing fail exactly when they’re needed most. The Middle East disruption has delivered the same lesson again, at greater scale and with longer consequences.
Infrastructure damage to LNG liquefaction facilities in Qatar is the factor the IEA flags most seriously for the medium term. The anticipated expansion wave in global LNG supply, which was expected to loosen balances through the second half of the decade, has been pushed back by at least two years. Cumulative losses between 2026 and 2030 could reach 120 billion cubic metres. New projects in other regions will eventually absorb some of that shortfall, but markets are likely to remain tight through 2027 at minimum.
European gas demand fell around 4% year-on-year in March, partly because renewable electricity generation was strong enough to displace some gas-fired power. Several Asian importers are accelerating fuel-switching programmes and demand-side measures. These responses reduce immediate pressure but don’t resolve the underlying supply gap.
The IEA’s broader message is consistent with what it has argued after every major supply disruption in the past decade: portfolio diversity in long-term contracts, continued investment across the LNG value chain, and producer-consumer cooperation are the instruments that determine how quickly markets recover. Countries with diversified contract portfolios are weathering this period with less exposure than those relying on spot procurement. The gap in outcomes between the two approaches is not subtle.