Global gas exports through the Strait of Hormuz have plummeted by 95 percent since the Iran conflict began, triggering what the United Nations describes as the most significant trade disruption at a single maritime chokepoint in modern history. Data published by the International Trade Centre on August 4 shows that across 12 key products, combined export volumes through the strait fell 54 percent between April 2025 and April 2026. Natural gas recorded the steepest contraction, followed by urea down 83 percent, methanol down 80 percent, and ammonia down 75 percent. The largest absolute losses were in crude petroleum, which fell by 28 million tonnes, followed by refined petroleum oils and LNG, which dropped by 7.3 million tonnes and 5 million tonnes respectively.
The numbers tell a story of cascading disruption across interconnected global markets. The Strait of Hormuz normally handles roughly one-quarter of global seaborne oil trade, a significant share of LNG flows, and one-third of globally traded urea. Iran’s blockade of the waterway since February 28 has effectively severed most of these flows, with only a trickle of ships permitted to pass under conditions set by Tehran.
Qatar’s Force Majeure Reshapes the Market
QatarEnergy’s force majeure declaration in March removed roughly one-fifth of global LNG supply almost overnight. The company has extended those force majeure notices into mid-October, signaling that normal operations remain months away. Under conditions of partial access, as existed in June, QatarEnergy managed to export approximately 2 million metric tonnes of LNG per month through the strait. That figure is far below the prewar baseline and insufficient to meet contracted obligations to buyers across Asia and Europe.
Asian spot LNG prices have surged above $22 per million British thermal units, their highest levels in more than three years. Gas Strategies, a consultancy, now projects that global LNG demand could fall 8 percent between 2025 and 2026, marking the first annual contraction in more than a decade. The forecast assumes that LNG exports from the Arabian Gulf remain significantly below capacity for the rest of the year, an assumption QatarEnergy’s own force majeure timeline appears to confirm.
The Demand Destruction Spiral
High prices are feeding a vicious cycle. Elevated LNG costs are forcing utilities and industrial consumers across Asia to reduce consumption, switch to coal where possible, or defer purchases entirely. The International Energy Agency’s August report cut its 2026 global oil demand forecast by 510,000 barrels per day from the July estimate, projecting a total decline of 1.6 million barrels per day this year. The agency cited the ongoing Hormuz closure and elevated fuel prices as primary drivers of the demand contraction.
For import-dependent economies in South and Southeast Asia, the impact is particularly severe. Pakistan, with limited domestic gas production, negligible strategic reserves and constrained foreign currency reserves, has struggled to secure supply at crisis-level spot prices. Each emergency procurement tightens fiscal conditions further, translating energy disruption directly into sovereign fiscal stress.
New Supply Races to Fill the Gap
The market has not stood still. U.S. LNG exports have surged, with QatarEnergy itself purchasing 33 U.S. spot cargoes in 2026 versus just four last year, reselling them into Asian markets at a substantial margin. The domestic Henry Hub price in the United States, trading around $2.72 per million BTU in August, remains a fraction of Asian spot levels, creating enormous arbitrage opportunities for portfolio players.
Canada is emerging as another significant alternative source. The country’s West Coast LNG projects offer export capacity and could rise to more than 45 million tonnes per annum if the Ksi Lisims LNG project and a second phase of LNG Canada proceed. The CSIS think tank notes that as global LNG supply becomes more diversified and abundant, temporary disruptions become less strategically significant, though the transition period creates enormous price and supply uncertainty.
Despite these alternatives, the remaining quarter of lost Gulf deliveries has no ready substitute. Shell has warned that repairs to damaged LNG infrastructure in Qatar could take until the first quarter of 2027, extending the supply gap well beyond initial expectations.
Structural Shifts in Energy Trade
The crisis is accelerating structural changes that were already underway. European countries have rapidly expanded LNG receiving capacity and diversified supply sources. The UAE has established ADNOC as a major crude supplier to India via Fujairah, which sits outside the Strait of Hormuz. Saudi Arabia is building a permanent Mediterranean crude export route through Turkey, reducing dependence on Gulf shipping lanes.
The disruption also highlights the growing role of alternative maritime corridors. Saudi Arabia and the UAE have pipelines that bypass the strait, but most Gulf exporters have limited alternatives. Oman’s efforts to mediate a traffic management arrangement with Iran represent the most promising diplomatic pathway, though U.S. officials have raised concerns that such an agreement could grant Tehran excessive influence over international shipping.
The Middle East’s share of global oil supply is projected to rise from 29 percent today to over 35 percent by the 2040s, according to Wood Mackenzie. That trajectory now carries far more geopolitical risk than it did 18 months ago, forcing importing countries to rethink energy policy at a fundamental level. The next phase of the global LNG market, industry executives say, will not be defined by who builds capacity fastest, but by who manages uncertainty best.
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