Commentary & Analysis

Since 28 February 2026, the US-Israel-Iran War has triggered a series of developments that have steadily expanded the conflict. One of the most critical consequences has been the trouble in the Strait of Hormuz, which has emerged as the single greatest threat to global energy security and has shown little prospect of returning to normal anytime soon.

With Hormuz nearly blocked and gas export facilities in Qatar and the United Arab Emirates (UAE) shut down, roughly 83 million tons of liquefied natural gas (LNG)—around 20% of global supply— remain unable to reach international markets.

In the Gulf, LNG tankers leaving Qatar’s Ras Laffan Industrial Complex (with a total annual production capacity of 77 million tons) and the UAE’s Das Island plant (6 million tons) must transit the Strait of Hormuz and the Gulf of Oman before reaching the Arabian Sea and moving on to global buyers. Natural gas exports from Gulf Arab states are entirely in liquefied form, as no gas pipelines connect the region to external markets.

On 23 March 2026, Abu Dhabi National Oil Company (ADNOC) halted all LNG output at Das Island--preceded by QatarEnergy’s 4 March decision to suspend LNG and associated liquids production at Ras Laffan, invoking force majeure—a legal clause allowing missed deliveries without penalty due to uncontrollable circumstances.

As a result, Qatar’s LNG exports have fallen sharply this year: from 7.62 million tons in January and 6.16 million tons in February, to just 0.78 million tons in March, 0.46 million tons in April, and 0.6 million tons in May. Exports recovered slightly in June (1.23 million tons) and July (1.52 million tons), but these figures translate to only 14.8 and 18.2 million tons annually—far below the current annual 77-million-ton nominal capacity. In the same context, Qatari LNG exports decreased by 96% between March and August as compared to the same period in the previous year, with only 18 cargoes leaving Ras Laffan to the markets compared to 509 cargoes in 2025.

The global market has no adequate replacement capacity to cover the 83‑million‑ton shortfall in gas supply that it has been facing since March, leaving its markets exposed and vulnerable. Beyond soaring prices, shipping insurance premiums, and freight costs, problems in crossing Hormuz have placed significant strain on global gas markets, especially in Asia. Major consumers--particularly Pakistan, India, China, Bangladesh, Japan, and South Korea--rely heavily on Gulf LNG, with up to 90% of the region’s exports destined for Asian markets. The resulting shortages have intensified competition for non-Gulf LNG, especially from the US, driving up costs worldwide and creating market pressure reminiscent of the 2022 energy crisis triggered by the Russian invasion of Ukraine.

As problems in trasiting Hormuz persist, a number of countries are benefitting from diverting LNG trade flows and the ripple effects of the Gulf shutdown. Many of these alternative suppliers are located in the Pacific Basin, beyond the reach of strategic chokepoints. Others are still in the process of developing their LNG industries, with the Gulf crisis accelerating their expansion plans.

If the Gulf and Hormuz disruption continues for a year or more, the global LNG supply crisis will gradually ease as new LNG and gas capacities come online. For the Gulf, every passing day without exporting its LNG further aggravates the balance against the interest of its gas exporters. In addition, demand will continue to weaken under the pressure of high prices and the enduring substitution of natural gas with alternative energy sources.

In fact, sustainable alternatives, especially coal and nuclear energy, stand ready to replace natural gas in many markets around the globe. Coal, in particular, is poised to benefit from continued volatility in global LNG markets. China is expanding domestic coal output and India continues to rely on coal for 70% of its power sector. In Europe, Germany’s coal industry continues to profit from LNG market instability despite long-term phase‑out plans, while Italy has postponed its coal phase-out to the year 2028, further demonstrating the extent to which energy-security concerns are shaping global near-term energy strategies.

Furthermore, many projects for building LNG import terminals have been cancelled worldwide, every one of which represents decades of large, contracted demand that will never materialize. This is the case in China where the thesis of the country leading global LNG demand growth through 2030 appears to be out of steam. Similarly, neighboring Vietnam axed its LNG terminal project, including its largest planned gas power plant, and South Korea restarted six nuclear reactors, which could lead to permanent LNG displacement in the world's third largest buyer of liquefied gas.

In the meantime, the world is witnessing a surge in renewable energies with the Gulf conflict incentivizing economies to further prioritize security of energy supply toward localized energy sources. While China has been exporting record numbers of solar panels, many countries around the globe are accelerating the deployment of renewable energies, solar in particular, to meet their energy demand.

All these developments in substituting natural gas with alternative energy sources reveal only the tip of the iceberg, representing just a small, visible part of a much larger, still partly hidden, strategy to transition away from gas.

With all that in mind, if disruptions in the Gulf and Strait of Hormuz persists, the global LNG supply crisis is likely to gradually subside as new LNG and natural gas production capacities become available elsewhere, potentially replacing much of the Gulf supply removed from the market. At the same time, gas demand would diminish under the strain of elevated prices and the growing and steady replacement of natural gas with alternative energy sources. The longer the disruption persists, the more difficult it may be for Gulf exporters to reclaim the lost market shares, potentially leading to an existential crisis for the Gulf LNG industry.

To save at least part of this industry, and to lessen the negative impacts of the Gulf and Hormuz conflict, the priority for the Gulf LNG exporters, even after the crisis is resolved, has to be the establishment of secure export outlets for LNG that bypass Hormuz. This will require building gas pipelines to major consuming centers in Asia and Europe. Although politically sensitive, costly, and time consuming, such gas pipelines may be the only practical way to alleviate the region’s heavy reliance on the Strait of Hormuz and reduce vulnerability of LNG exports through it. Linking national gas networks to regional and international pipelines must urgently be pursued to ensure readiness for future emergencies.

In addition, serious steps, including well-designed public relations campaigns and profile-raising movements must be urgently taken at both national and regional levels to address the severe reputational damage surrounding the security and reliability of Gulf LNG.

In addition, Gulf countries could aim to diversify their LNG portfolio by acquiring gas liquefaction assets abroad. Qatar is already developing the Golden Pass project in the US, while the UAE has invested in NextDecade (US), and Galp (Mozambique). Alongside these moves, securing or leasing gas storage facilities in major consuming markets would help maintain supply chains during crises.

Still, overseas gas liquefaction units and storage facilities are not within national control, administration, or jurisdiction of the Gulf countries and therefore cannot be managed at will. Such plants have their own operation and marketing agendas that may not necessarily align with those of Gulf investors. Therefore, the acquisition of such foreign assets cannot and will not replace the need to find export routes other than the Strait of Hormuz.

Dr. Naji Abi-Aad Senior Energy Advisor – Gulf Research Center