An Unprecedented Supply Shock in LNG

The ninth month of the Hormuz crisis lays bare a reality the market had long underestimated: liquefied gas has no logistical plan B. According to the International Energy Agency, the conflict deprived the world of roughly 60 billion cubic meters of LNG over the eight months to October. Rising US and African output covered up to two-thirds of that shortfall — but no more.

The balance shows up in production statistics. The IEA expects global LNG output to fall 3% for the year, and 6% over the March-October period. That would be the steepest annual decline ever recorded. Prices followed: the Japan-Korea Marker, the Asian benchmark, topped $31 per million BTU this month, with a peak above $33, against just over $9 in January. In ten months, the spot price has more than tripled.

Qatar: From Exporter to Customer of Its Rival

The shock hit Qatar head-on. March missile attacks knocked out 17% of its export capacity, or about $20 billion in annual revenue according to QatarEnergy. Its remaining output stays largely blocked: very few cargoes clear the strait. The group extended force majeure on deliveries to Asia and Europe through end-December 2026, and declared it for up to five years on some long-term contracts.

QatarEnergy's response is unexpected. The group ruled out the pipeline option: its CEO, Saad Sherida Al-Kaabi, argues that building redundant facilities "makes no economic sense." Instead, it signed two long-term deals with its US competitors. The first covers up to 4 million tonnes per year with Cheniere (Sabine Pass and Corpus Christi), with deliveries from 2031 to 2054. The second covers 3 million tonnes per year with Woodside's Louisiana LNG project, on a FOB basis, starting in 2030 for twenty years. Those volumes make QatarEnergy the largest buyer of US LNG.

Our read is that these contracts do not address the current shortage, since first deliveries come only in 2030. They are insurance against durably impaired access to the strait. Yet Al-Kaabi claims Qatar can resume normal operations "a few weeks" after Hormuz reopens. The group is thus preparing for two scenarios: a rapid return to normal, or a durably constrained strait.

Europe: Between Scarce LNG and Sensitive Physical Flows

Tension runs higher in Europe than in Asia. Asia can fall back on coal, while Europe has few alternatives to Qatari LNG. It finds itself in direct competition with Asia for a limited number of cargoes. Against that backdrop, gas flows at German and Dutch borders are a useful dependence indicator.

As of October 30, the Emden EPT1 entry point, on the Norpipe side, logged about 402.5 million kWh per day, and the VIP TTF-THE-H point about 482.9 million kWh per day inbound, against 180.8 million outbound. Tarvisio (Austria-Italy link) showed 144.4 million kWh per day and Zeebrugge IZT, on the UK-Belgium interconnector side, 72.6 million. Conversely, points tied to Central and Eastern European flows (Mallnow, Waidhaus, Baumgarten TAG) stayed at zero.

Caution is warranted for October 31. Emden shows only 77.6 million kWh per day inbound, VIP Oberkappel 22.6 million outbound against 112.5 million the day before, and Zevenaar has no value. These are very likely incomplete readings for a day still being consolidated. They signal neither collapse nor recovery.

Next-day power prices also reflect tension: €250.85/MWh in the Czech Republic, €254.14 in Switzerland, €250.56 in West Denmark, €211.19 in Portugal, but €77.51 in Finland. Gas often sets the marginal power price on the continent, which offers a possible explanation. The file does not, however, prove that link, especially since it contains neither TTF prices nor storage levels.

What Could Change the Picture

Several factors temper the diagnosis. Demand is already adjusting: global gas consumption fell 1% over nine months, or 35 billion cubic meters — a decline far smaller than the supply contraction, a sign of inelastic demand. Energy Intelligence nonetheless estimates that the price surge could curb it further, as in other commodities. Long-term prospects remain solid: Shell expects LNG demand to rise 65% by 2050, driven notably by data centers.

That engine is itself uncertain. US elections have produced candidates opposed to data center construction, and equity markets have begun pricing in a possible AI slowdown. On the oil front, the post-vote price drop may also reflect anticipation of a crisis exit. The carbon cost remains another blind spot: Asia is turning to coal, which is cheaper than gas.

A Durable Strain, an Open Trajectory

What the facts establish is limited but clear. Global LNG supply is in historic decline, spot prices have tripled, and the first player hit is seeking to diversify its exposure. The rest depends on the reopening of Hormuz, which nothing in the file allows us to date, on the speed of repairs to Qatari facilities, and on the real trajectory of AI-driven power demand. Until then, security of supply remains the criterion that sets prices.

This article was written with the assistance of artificial intelligence and verified by our editorial team.