War is reshaping LNG beyond winter

Gastech 2026 in Bangkok highlighted that the LNG market has fundamentally shifted due to the Middle East conflict. The Strait of Hormuz remaining closed by Iran has made global supply more vulnerable and unreliable. As a result, 20% of global supply behind the straits is now seen as "interruptible." This has increased the value of more reliable supply sources, as volatility around contract decisions rises.

Europe's storage levels are another concern, especially if Gulf capacity stays shut. Meanwhile, the EU's Methane Emissions Regulation and sanctions on Russian LNG are other uncertainties weighing on the market. While some countries, particularly in South Asia, are buying LNG at high prices, this demand seems temporary, driven by price sensitivity and arbitrage opportunities.

Deal activity has been sluggish, as industry leaders struggle to decide on long-term strategies amid the conflict. Buyers are cautiously returning to the market for long-term contracts, fearing the timing could impact future demand. The US is stepping in to fill the supply gap, with nearly 90 mmtpa of LNG having final investment decisions (FIDs) in 2025 and 2026.

This surge in US LNG could force buyers to proceed despite the risks, including single-country dependence and Henry Hub exposure. Meanwhile, there is momentum in supply diversification, with US projects in Mozambique, Argentina, Canada, Papua New Guinea and Indonesia advancing. Floating LNG (FLNG) projects are gaining traction as they can unlock undeveloped gas reserves, though buyers, governments and export credit agencies remain cautious about the risks.

The industry sees relationships as key in uncertain times, but the availability of free-on-board supply in the Gulf of America suggests some buyers may prioritize short-term market security. Ultimately, the industry must find innovative ways to adapt to this new reality, balancing risk across geography, tenor and basis to meet growing energy demands.