Middle East Conflict Cripples Global LNG Trade

The conflict has forced a dramatic shift in global energy flows as liquefied natural gas (LNG) shipments dwindle. ICIS data reveals that only 26 cargoes successfully departed the Gulf since late February, a fraction of the typical 90 to 100 monthly shipments. Infrastructure damage compounds this shortfall; strikes on Qatar’s Ras Laffan and Pearl GTL facilities have sidelined 12.8 million tonnes of annual capacity for years. Consequently, Europe’s gas storage levels have dipped below 54%, significantly trailing last year’s 64% benchmark.

Energy-intensive economies in Asia are bearing the brunt of the instability. In Pakistan, LNG imports have plummeted by 75%, while South Korea and China have reported 10% and 8% declines, respectively. To bridge the gap, nations are pivoting back to traditional fuels, with South Korean regulators lifting caps on coal-fired power generation to offset the loss of natural gas. Similarly, Indian refineries are increasingly turning to naphtha and fuel oil as spot market prices for the Japan/Korea Marker (JKM) hover near $25 per MMbtu.

Analysts warn that the era of relying on Middle Eastern supply chains is facing a mandatory reckoning. While global LNG growth was projected at 11% for 2026, the current volatility has slashed that outlook to a mere 1%. As buyers scramble to secure energy security, the focus is shifting toward diversifying away from vulnerable transit chokepoints. Policymakers now face the prospect of costly state interventions if storage targets remain unmet heading into the winter season, marking a return to the crisis-management strategies last seen during the 2022 energy crunch.