LNG buyers scramble for new supply as Iran war reshapes global gas trade

The disruption of shipping through the Strait of Hormuz has reshaped global liquefied natural gas trade, pushing importers across Asia and Europe to scramble for alternative supply sources and giving new life to gas projects from West Africa to South America.

A Scramble for New Sources

LNG buyers are actively diversifying their procurement as the U.S.-Israeli war against Iran continues to choke off Gulf shipments, according to Reuters. At last week's Gastech conference in Bangkok, government officials and industry executives outlined strategies to reduce dependence on Middle Eastern supply by locking in volumes from a wider range of sellers.globalbankingandfinance+1

"A lot of governments are thinking not just diversification of the suppliers, but diversification of supply routes," Sue-Ern Tan, head of the International Energy Agency's regional cooperation centre in Singapore, said at the conference.globalbankingandfinance

Thailand's state firm PTT is pursuing supply from Oman, North America, and West Africa, with its trading arm signing a long-term deal with Norway's Equinor ↘ 2.72% on Friday. Bangladesh, previously reliant on Qatar for the bulk of its LNG imports, is now looking to Indonesia, Australia, and China, Power Minister Iqbal Hasan Mahmud told delegates. In the early stages of the conflict, PetroChina and India's GAIL were able to pivot to other regions for replacement cargoes, though at steep premiums.globalbankingandfinance

Supply Losses Smaller Than Feared

Despite the loss of roughly 36 million metric tons of Middle Eastern supply, new capacity additions have cushioned the blow. The net global supply loss this year stands at around 5 million tons, or 1% to 1.5% of total supply, Shell's ↘ 0.71% executive vice president for LNG marketing and trading Tom Summers said at Gastech. An additional 70 to 80 new LNG vessels entering service each year has also provided shipping flexibility.globalbankingandfinance

High prices and the demand for diversified supply are boosting prospects for emerging producers including Argentina, East Timor, and Tanzania. Japanese energy firm Inpex is advancing its 9.5-million-ton Abadi gas project in Indonesia, with an investment decision slated for mid-2027.globalbankingandfinance

Europe's Storage Gap Supports U.S. Gas

The disruption's ripple effects extend to U.S. natural gas markets. European storage sat at 69% full as of September 16, compared with a five-year average of 85%. LNG net flows to U.S. export terminals ran 19.2 billion cubic feet per day, up 0.7% from the prior week, while the EIA raised its 2027 U.S. production forecast to 116.0 bcf per day. With Norwegian pipeline supply stretched and Qatari cargoes stranded behind the Strait, Europe is paying spot LNG prices near $26 per million British thermal units — roughly 150% above February levels.fxempire+1