Middle East Conflict Tightens LNG Supply, Redirects Cargoes To Asia

The shutdown of key gas export facilities in the Middle East is tightening global liquefied natural gas supplies, raising the risk of a deficit and pushing cargoes toward Asia as buyers compete for limited shipments, according to Bloomberg.

Ras Laffan in Qatar — the world’s largest LNG export complex — has halted production, while shipping through the Strait of Hormuz has also been disrupted. Bloomberg calculations based on 2025 output suggest that roughly three Qatari LNG cargoes are effectively removed from the market for every day the disruption continues. A smaller export facility in Abu Dhabi is also unable to ship, leaving about 20% of global LNG supply offline.

The tightening market is already reshaping trade flows. Ship-tracking data compiled by Bloomberg show that at least nine LNG cargoes originally bound for Europe have diverted to Asia since the fighting began, with the pace increasing in recent days as spare supply in the market rapidly dwindles.

“If this situation were to persist for multiple months, dragging well into the summer, there aren’t enough alternative LNG sources to sufficiently supply the global market,” said Mathieu Utting, an analyst at Rystad Energy. “The two other major LNG suppliers, the US and Australia, are already operating at full capacity with little room to increase utilization.”

The squeeze comes at a critical moment for both regions. Europe needs additional LNG to rebuild storage depleted during winter, while hotter-than-normal weather in parts of Asia is expected to boost air-conditioning demand in the coming months. Prices in both regions have surged over the past week, raising concerns about inflation and economic impacts.

“Asian buyers will need to supplement their term supply with spot cargoes,” said James O’Brien, head of LNG at D.Trading, a unit of Ukraine’s private energy company DTEK. “This will inevitably pull more Atlantic molecules east.”

Bloomberg writes that buyers in India, Bangladesh and Thailand have already turned to the spot market for additional supply, though some recent tenders for March delivery — including ones from India — failed to attract sellers because of limited availability and high prices.

52% of VG float is short, indirectly a short also on LNG. Good luck https://t.co/zC5o8OVOAZ pic.twitter.com/UHsamIacTt
— zerohedge (@zerohedge) March 6, 2026

New LNG supply from the US is unlikely to arrive quickly. While projects including Golden Pass in Texas and expansions at Corpus Christi and Plaquemines are progressing, additional capacity will come online only gradually.

Analysts say the disruption is also reducing the chances of a widely expected LNG glut this year. Morgan Stanley said any extension of the Qatar outage beyond a month “quickly brings a deficit,” after the bank had previously forecast 6 to 8 million tons of oversupply.

Rabobank strategist Florence Schmit estimates that each week of lost Qatari production cuts the expected surplus by about 1.5 million tons, leaving only a few weeks before the market tips into deficit.

“Markets are now facing a supply deficit even with higher US flows,” Schmit said. “The LNG glut has been delayed by a year.”

Tyler Durden Thu, 03/12/2026 - 04:15