Hormuz Crisis Threatens Long-Term Damage to Global LNG Markets

Why It Matters

The Hormuz disruption alters near-term global LNG availability and price dynamics, affecting investment decisions and FID timing for high-cost projects (notably in Canada) and shaping contract structures and market exposure for major exporters. Policy makers and buyers must reassess supply security and pricing-index risks amid heightened geopolitical uncertainty.

Summary

Energy Flux built a scenario model to quantify how a Strait of Hormuz closure interacts with a large wave of new LNG supply, letting users test reopening timing, partial transit rates and project delays to plot net supply balances. The firm argues that while US Gulf Coast and Qatari expansions (plus some Canadian projects) could eventually offset curtailed volumes, a prolonged closure would deepen deficits and push back the anticipated 2027–29 supply glut. That timing uncertainty matters because it determines whether new capacity simply replaces lost flows or creates oversupply that compresses prices. Even projects with long-term offtake contracts face indexation risk—returns will vary depending on whether prices track oil or spot markers like JKM.

Original Description

The Strait of Hormuz closure is exposing deep vulnerabilities in global LNG markets.

Energy Flux founder Seb Kennedy joins me to explain:

• Why LNG shortages could persist for years

• How new U.S. and Qatari LNG supply changes the outlook

• Why Europe and Asia remain vulnerable

• The growing role of AI-driven trading volatility

• Why a future LNG glut could follow today’s crisis

We also discuss Canadian LNG, demand destruction, long-term contracts, and why the economics of LNG projects could look very different by 2028–2029.

#LNG #NaturalGas #EnergyMarkets #Iran #Hormuz #EnergyTransition #Canada #Geopolitics #OilAndGas #EnergySecurity.