LNG Market on Brink as US-Iran Conflict Disrupts Supplies

The global liquefied natural gas (LNG) market is facing significant challenges as the conflict between the United States and Iran continues to disrupt supplies. According to The Economist, the war has stripped the global market of a fifth of its LNG supplies, with Qatar's export capacity knocked out by 17%.

Asian demand for US cargoes has surged due to scorching summer temperatures, pushing up prices in Europe and Asia by 55% and 73%, respectively. The lack of supplies from Qatar, normally Asia's main supplier, has left European reserves depleted, with only 47% full - the lowest level in 15 years.

The market is so tight that a series of small shocks could trigger a supply crisis. Three risks stand out: supplies from the Gulf may not be restored in time; extreme weather events could increase demand for cooling and electricity; and infrastructure failure, such as drought-emptying hydroelectric power plant reservoirs or nuclear reactor shutdowns.