Middle East War Cuts Global LNG Supply, Accelerating Price Hikes

The global hunt for liquefied natural gas (LNG) has intensified due to the ongoing war in the Middle East, leading to a shift in physical supply flows. At least nine LNG shipments initially headed to Europe have diverted to Asia since the conflict began.

According to ship-tracking data compiled by Bloomberg, this trend is accelerating, with spare supplies dwindling and threatening more competition and higher prices for both regions.

LNG suppliers, including Shell Plc, are declaring force majeure for customers across Asia due to halted flows from the Middle East. This demonstrates a growing ripple effect throughout the global gas market.

The conflict has shut down Ras Laffan, the world's largest LNG export facility in Qatar, and halted traffic through the Strait of Hormuz. For each day the disruption continues, roughly three Qatari LNG cargoes are effectively removed from the market, totaling about 20% of global LNG supply.

Analysts predict that if the situation persists beyond a month, it could lead to a supply deficit in the global market. The US and Australia, already operating at full capacity, may not be able to increase utilization to meet demand.