Middle East war delays global LNG glut to 2028, BNEF says

The global liquefied natural gas market will shift into oversupply in 2028, a year later than previously forecast, as the war in the Middle East and damage to Qatar's export infrastructure continue to tighten near-term supply, according to a new BloombergNEF report published Monday.finance.yahoo+2

Prior to the conflict, analysts had widely anticipated a wave of excess LNG supply washing over the market in 2027, driven by a surge of new export capacity coming online in the United States and elsewhere. The Iranian strikes on Qatar's Ras Laffan complex in March knocked out roughly 17% of Qatar's LNG export capacity, removing an estimated 12.8 million tonnes per year from the market for three to five years, according to QatarEnergy CEO Saad al-Kaabi.reuters+2

A Delayed but Larger Surplus

The BNEF report forecasts more than 100 million tonnes of LNG oversupply by 2031 as new terminals ramp up globally. Meanwhile, provisioning U.S. LNG export terminals has become the fastest-growing source of demand for American gas producers, with U.S. gas supply itself expected to fall into deficit by 2028.semafor

The assessment aligns with other recent analyses. The International Energy Agency said in April that the war had pushed back the anticipated period of abundance "by at least two years". Jason Feer, Global Head of Business Intelligence at LNG brokerage Poten & Partners, said in a July webinar that "essentially what the war has done is push back that period of abundance from what everyone was expecting," placing the onset of surplus around 2029.gasoutlook+1

Demand Destruction Limits Price Spike

Despite the removal of roughly one-fifth of global LNG capacity from the Persian Gulf, prices have not reached the extremes some predicted. Asian spot prices nearly doubled to $20 per MMBtu in the early days of the conflict but have since retreated to around $15, held in check by widespread demand destruction and higher U.S. output. Europe has been particularly hard hit, with Poten estimating about 17 million tonnes of demand destruction over a six-month period.gasoutlook

Investment Outlook Clouded

The crisis has not yet triggered a rush of new long-term contracts. Just 25 deals covering 26 million tonnes were signed through May 2026, compared with about 70 deals in all of 2025. European buyers remain reluctant to commit to 20-year contracts with U.S. exporters given declining domestic gas demand and expectations that oversupply will eventually arrive. Analysts say the broader LNG expansion trajectory remains intact, but the combination of short-term volatility and long-term surplus expectations has left both buyers and sellers "sitting on their hands".gasoutlook