Middle East Crisis Drives LNG Traders to Seek Alternative Supplies

The ongoing US-Israeli war against Iran has disrupted Gulf shipments of liquefied natural gas (LNG), prompting LNG traders to consider alternative supply options. Importers are seeking alternatives from various countries, including West Africa and Indonesia, as global oil markets consider diversifying sourcing.

Asian governments are looking to lock in LNG from sellers with access to multiple sources, while producers and trading firms want to expand their supply pools by investing in gas projects and buying from different countries. The push for diversification could boost projects outside the US and Qatar, which dominate planned capacity additions, although Qatar's LNG infrastructure was damaged early in the war.

Thai state firm PTT is looking to Oman, North America, and West Africa for supplies, while its trading arm has inked a long-term deal with Norway's Equinor. Bangladesh was previously reliant on Qatar for most of its LNG imports but is now exploring Indonesia, Australia, and China as alternatives.

Despite the loss of 36 million metric tons of supply from the Middle East, new capacity additions mean that the net supply loss this year is only around 5 million tons, or 1% to 1.5% of global supply. High LNG prices and demand for diversified supplies have boosted prospects for new producers such as Argentina, East Timor, and Tanzania.