Key Moments
- About 20% of daily global LNG supply from the Middle East has been disrupted, tightening an already stressed market.
- Europe is struggling to rebuild gas storage from multi-year lows. At the same time, Asia is increasing demand due to hotter weather forecasts.
- Analysts say recent price spikes are part of a longer-term structural shift in global LNG markets.
Shock Supply Loss Meets Rising Summer Demand
The global gas market is already under pressure. Roughly 20% of LNG supply has been lost, which has tightened conditions further.
Now, demand is also rising. Forecasts point to higher summer temperatures and an El Niño pattern. As a result, gas use is expected to climb across Asia.
In addition, Asian and European prices could rise further. This may happen if LNG carriers remain unable to transit the Strait of Hormuz through the summer. Meanwhile, Asia is ramping up cooling demand, and Europe is rebuilding storage after multi-year lows at the end of the 2025/2026 winter.
Middle East Disruptions Drive LNG Shortage
LNG buyers have rushed to replace lost supply. The closure of the Strait of Hormuz has blocked about 20% of global daily LNG flows. Most of this supply comes from Qatar and the UAE.
In addition, attacks on regional energy infrastructure have worsened the disruption. Damage at Qatar’s Ras Laffan LNG plant has hit production. The facility is the world’s largest of its kind.
After the strikes, QatarEnergy declared force majeure on some contracts. It warned that full recovery could take up to five years.
Qatar has also faced shipping delays. Some LNG cargoes have remained stuck in the Persian Gulf for months. Earlier this week, QatarEnergy extended force majeure on deliveries to Edison until mid-August.
The shock arrived during the shoulder season. Demand is usually lower in spring. However, Europe still needs LNG to refill storage after a weak winter.
At the same time, Asia has adjusted demand. Buyers reduced spot purchases and increased coal use. This helped offset part of the supply loss.
Weather Risks Add New Price Pressure
Weather now adds another layer of risk. Forecasts point to hotter-than-normal conditions across Asia. If this happens, LNG demand may rise sharply.
El Niño may also reduce hydropower output in China. As a result, China could increase coal and gas use to fill the gap.
Europe remains vulnerable. It is losing competition to Asia in the spot market. Higher Asian prices are pulling cargoes away from Europe.
“It’s a tight gas market in Europe,” said Helle Ostergaard Kristiansen of Equinor.
She added that gas storage remains difficult to refill. “There’s simply a lack of physical gas,” she said. “And it is becoming more critical by the day.”
China has already begun to return to the market. LNG imports are rising from recent lows. If heatwaves continue, demand could increase further.
Europe–Asia Competition and Market Pressures
| Factor | Impact |
|---|---|
| Loss of ~20% Middle East LNG supply | Tightens global availability and forces cargo replacement |
| Strait of Hormuz disruption | Blocks shipments from Qatar and the UAE |
| Damage at Ras Laffan LNG plant | Reduces output and delays recovery for years |
| Hot summer and El Niño | Raises cooling demand and lowers hydropower output |
| Low European storage | Weakens Europe’s ability to compete for cargoes |
| China demand rebound | Increases competition for limited LNG supply |
From Short-Term Shock to Structural Shift
The supply loss may last longer than expected. As a result, prices are likely to stay elevated through summer and possibly into winter.
Analysts at Wood Mackenzie see this as more than a short disruption. They describe it as a structural shift in the LNG market.
At the same time, shipping costs are rising. LNG charter rates have increased as traders secure flexible cargoes ahead of peak demand.
“Asia is ramping up purchases of flexible cargoes,” said analysts at Vortexa. This is helping offset Middle East supply losses.
Finally, warm weather and weak storage levels are tightening the balance further. Europe and Asia now compete more directly for limited LNG supply.
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