LNG

QatarEnergy CEO Saad al-Kaabi has identified shipping logistics as the biggest hindrance to resuming LNG exports from Ras Laffan once the Strait of Hormuz reopens, underlining tight tanker availability and routing constraints may impact the recovery of one of the world’s largest LNG export terminals.

Chinese-linked ships have been using their identity to transit the Strait of Hormuz on March 1-8, Lloyd’s List Intelligence data shows. None of the six vessels were oil or LNG tankers.

The Chinese government is urging Iran to ensure safe passage for Qatari LNG carriers and crude oil tankers through the Strait of Hormuz, as Beijing relies heavily on these imports. Shipments have dropped from an average 20 to 24 LNG tankers per day at the beginning of 2026 down to zero.

Japan’s three major shipping lines – Nippon Yusen, Kawasaki Kaisha and Mitsui O.S.K. – have suspended all vessel transit through the Strait of Hormuz following US and Israeli air strikes on Iran. Instead, they order LNG carriers and crude oil tankers to standby in the Persian Gulf in safe waters, impacting prices.

Prompt prices at the Dutch TTF gas trading hub are rising on mounting risk that US strikes Iran – now seen as “more likely than not” – could threaten LNG trade flows via the Strait of Hormuz. Approximately 7.1 million tons per month of LNG from Qatar and the UAE currently transits the Strait of Hormuz, or one-fifth of global LNG trade.

High spot LNG prices and subdued demand from industry made China’s LNG import plunge by more than 20% in the first quarter of this year. Fast build-out of liquefaction capacity in the US, Canada and Qatar will ease market tightness from 2026, fostering robust demand growth in Asia’s price-sensitive markets, the International Energy Agency (IEA) forecasts.

Thailand’s Energy Regulatory Commission (ERC) is stepping up efforts to mitigate risks posed by disrupted LNG trade flows through the Strait of Hormuz. Nearly two-thirds of Thailand’s electricity comes from gas-fired power stations which largely depend on imported LNG, making them vulnerable to supply shortages and geopolitical risk.

Baseload US LNG supply to Asia – price-insensitive volumes that will head to the Pacific Basin regardless of JKM–TTF spreads – is averaging 20 percent, or 1.7 million for July. Outturn JKM prices are hovering around $12.98 per MMBtu, with analysts carefully observing developments around the Strait of Hormuz.

Escalating tensions between Israel and Iran have pushed up crude oil prices to nearly $75 per barrel. The geopolitical risk premium has soared to around $8 per barrel, impacting oil-indexed natural gas contracts as well as term LNG deliveries.

The outlook hinges on Iran’s response. If the regime in Teheran keeps airstrikes focussed on Israeli military sites, as seen in past episodes, price increases may remain contained and temporary, Rystad analysts reckon. But if Iran escalates by disrupting crude oil and LNG shipments through the Strait of Hormuz, or attacks regional energy infrastructure, prices could go through the roof.

In an undisguised threat, US President Donald Trump warned the Iranian regime to stay clear on attacking American military bases in the Middle East, or face dire consequences. 

Nautical chokepoint

The Strait of Hormuz – a key nautical route between the Mediterranean and the Red Sea – is the chokepoint in this scenario. Around 12 million barrels per day of crude oil pass through the strait, over 80% of it bound for Asia. Additionally, over 3.5 billion cubic feet (bfc) of natural gas, or 18% of world shipments, travel through the strait onboard of LNG tankers.

Though there is a pipeline to bypass the Strait of Hormuz, the capacity of that pipeline is limited. Saudi Arabia’s East-West oil pipeline and the UAE’s Habshan-Fujairah oil pipeline together can handle around half of the flow. As for natural gas, the Abqaiq-Yanbu pipeline runs parallel to the East-West Petroline in Saudi Arabia, bypassing the Strait of Hormuz. Its capacity is 290,000 barrels per day, carrying primarily gas liquids.

To date, Iran never succeeded in blocking the Strait of Hormuz which is jointly controlled with Oman. Past tactics included seizing or harassing tankers by jamming their GPS signals to draw them into Iranian waters.

“If Iran were to attempt a full-scale blockade of the Strait, it would likely face strong international pushback,” Rystad head of geopolitical analysis Jorge León warns. Retaliatory actions are to be expected particularly from countries of the Gulf Cooperation Counci, comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

Even Iran’s key ally, China, would be hit hard by higher oil and LNG prices, he underlined, stressing such a move would isolate Iran politically and economically.

Beware shipping rates

Peter Sand, Xeneta chief analyst takes a similar view: “Any closure of the Strait of Hormuz would see services re-routed, with increased reliance on India West Coast ports for connecting the Far East to Indian sub-continent,” he noted. The inevitable disruption and port congestion, as well as the potential for higher oil prices, would cause a spike in ocean freight container and LNG shipping rates.

Average spot rates from Far East to North Europe are up 62% since early December 2023, just before escalation in the Red Sea, while average spot rates to US East Coast – another trade that would ordinarily transit the Suez Canal – are up a staggering 165%, analysts pointed out.

Oman, the Arabian Peninsula country and oil producer and long-standing LNG exporter, has been hit by a cyclone, causing major disruption with power cuts and flooding.

The Oil Ministry issued a statement saying that loadings and operations may be temporarily affected as “Cyclone Shaheen” moved along the Sea of Oman.

However, the Ministry said oil fields are far from the path of the cyclone and that there was unlikely to be interruptions to the production of oil nor of feed gas for LNG.

The main Omani LNG export facilities are at the port of Sur on the Gulf of Oman. The plant comprises the three amalgamated liquefaction Trains of two former separate companies, Oman LNG and Qalhat LNG.

Oman exports around 11 million tonnes per annum and its customers include South Korea with around 3.9MT of annual supplies, Japan with about 3MT as well as other leading importers like China and India.

Oman's National Multi Hazard Early Warning System said “Cyclone Shaheen” was accompanied by wind speeds of up to 116 kilometres per hour (72 mph) when it hit the country on October 3, with the cyclone causing heavy rainfall and high waves.

According to the authorities the areas affected by “Cyclone Shaheen” were in the wilayats of Musannah in South Al Batinah Governorate and Saham in North Al Batinah Governorate.

Rescues

There were no clear details of casualties, though dozens of people have been rescued by the Civil Defence and Ambulance Department (CDAA) in different areas.

Oman Air rescheduled 10 flights to an earlier departure time before the cyclone hit.

New gas fields have boosted feed-gas availability for LNG exports in the last few years from the onshore Block 61 comprising the ‎Khazzan field, which began production in 2017, and the Ghazeer field, onstream since October 2020.

Block 61 covers around 3,950 square kilometres in central Oman, and contains the largest tight-gas ‎development in the Middle East.

Gas from the Block is also sent for domestic consumption ‎into Oman’s national gas grid.

Oman is also making progress with developing the Sohar Port and Freezone that is also the future site of an LNG bunkering project on the Arabian Sea coast and near the entry to the Gulf by the Strait of Hormuz.

Oman’s Sohar Port is one of the fastest-growing in the world because of its strategic location.