Hormuz Disruptions Send LNG Shipping Costs Soaring

Disruptions to vessel traffic through the Strait of Hormuz have pushed liquefied natural gas (LNG) shipping costs to their highest levels since 2022. According to a report by the Gas Exporting Countries Forum (GECF), LNG charter and marine fuel costs have surged due to reduced available carrier capacity, extended voyage times, and increased security risks along the Red Sea and Suez Canal route.

The Strait of Hormuz is the only maritime export route for LNG shipments from Qatar and the United Arab Emirates, which together account for around one-fifth of global LNG supply. Following the escalation of the conflict in the Middle East on February 28, LNG exports from Qatar and the UAE came close to a standstill.

The GECF report revealed that between March and June, more than 300 Qatari LNG cargoes and around 20 UAE cargoes failed to reach international markets. This led to an estimated 160 LNG carriers being stranded inside the Gulf or forced to remain at anchor in the Gulf of Oman, limiting the number of vessels available in the spot market.

Security risks along the Red Sea and Suez Canal route also prompted LNG carriers to divert around the Cape of Good Hope, adding thousands of nautical miles to voyages between the Middle East and global markets. This increased voyage times by 15-20 days, requiring more vessels to transport the same volume of LNG.