The closure of the Strait of Hormuz has removed almost one-fifth of global liquefied natural gas supply, pushing LNG prices to their highest levels since 2023 and exposing the fragility of global energy security.
LNG prices rise as Hormuz disrupts global supply
Just as energy markets were beginning to regain balance, the war in Iran and its wider effects have pushed liquefied natural gas back to the centre of the global energy agenda. The closure of the Strait of Hormuz has cut almost 20% of global LNG supply, reigniting price pressure and driving volatility sharply higher.
The IEA’s quarterly gas market report shows that the gas system has been hit by a sudden shock, reversing within weeks the stabilisation trend recorded between late 2025 and early 2026.
Between October and February, global LNG supply had grown by 12% year on year, equal to 29 billion cubic metres, mainly supported by new facilities in North America. This increase had helped bring prices down: in Europe, the TTF fell by 24%, while in Asia the JKM dropped by 27%.
The situation changed abruptly in March, when the blockade of the strait interrupted flows from Qatar and the United Arab Emirates, which together account for a decisive share of global exports.
Liquefied natural gas exposed by the closure of Hormuz
The core of the crisis is the Strait of Hormuz, through which around 20% of global LNG trade passes, equal to about 110 billion cubic metres a year.
The war in Iran and attacks on energy infrastructure have led to the near-total suspension of exports from the Gulf. The result was an immediate fall in global LNG production, which dropped by 8% year on year in March, with a loss of about 4 billion cubic metres.
In the short term, the impact was amplified by the structure of the market itself. Liquefied natural gas flows depend on maritime logistics, and there are no alternative routes for the main Gulf exporters. Around 90% of volumes moving through Hormuz are destined for Asia, making those markets particularly exposed.
Natural gas returns to energy crisis levels
The most immediate impact was seen in prices. In March, natural gas prices reached their highest levels since the 2022-2023 energy crisis. In Europe, the TTF averaged USD 18 per MBtu, while in Asia the JKM approached USD 21 per MBtu.
Even more significant was the rise in volatility. The TTF volatility index climbed to 160%, while the Asian index reached nearly 300%, signalling an extremely unstable market.
The crisis also reversed trade flows. The price gap pushed LNG cargoes away from Europe and towards Asia, where the premium reached USD 2.8 per MBtu.
Demand falls as renewables gain ground
Faced with rising prices, global natural gas demand began to decline, especially in major importing countries.
In Europe, consumption fell by around 4% in March, also thanks to higher renewable energy generation, which reduced the use of gas in power production.
In Asia, several governments responded by introducing demand containment measures. These include greater use of coal-fired power generation, the restart or expansion of nuclear capacity, and lower consumption in the most energy-intensive industrial sectors.
Together, these measures are accelerating fuel switching, meaning the replacement of natural gas with other energy sources that are more available or less costly in the short term. According to the report, this trend could reduce global gas demand by up to 60-65 billion cubic metres on an annual basis.
The role of liquefied natural gas in energy systems
Despite the crisis, liquefied natural gas confirms its central role in global energy security. In Europe, during the winter of 2025-2026, LNG imports reached a record 104 billion cubic metres, covering more than 40% of gas supply.
This figure shows that LNG has become a structural source of supply, especially in a context of declining pipeline deliveries and falling domestic production.
At the same time, extreme weather events, including cold spells in the United States, Europe and Asia, have shown the importance of gas flexibility in protecting power system security.
For African importers and energy planners, particularly in Sub-Saharan Africa, the crisis is also a reminder that exposure to global LNG spot markets can quickly translate into higher costs and supply risks.
The war in Iran will have lasting effects
Beyond the immediate impact, the crisis is also reshaping the long-term outlook for the liquefied natural gas market.
Damage to facilities in Qatar and delays to expansion projects are slowing the so-called “LNG wave”, the new wave of production capacity expected in the second half of the decade.
According to the IEA, this will result in a cumulative loss of about 120 billion cubic metres of LNG between 2026 and 2030, equal to around 15% of the global supply expected over the same period.
The estimated delay is at least two years, with the strongest effects concentrated between 2026 and 2027, extending a market phase marked by tension and high prices.
Energy security and new balances in the global gas market
The crisis highlights a structural weakness in the global energy system: dependence on a few logistical chokepoints and a limited number of major exporters.
For the IEA, responding to these vulnerabilities requires a broader strengthening of the energy security architecture. This first means greater diversification of supply sources, reducing exposure to single points of crisis such as the Strait of Hormuz.
At the same time, investment is needed across the entire liquefied natural gas value chain, from liquefaction infrastructure to maritime logistics and regasification terminals.
This is particularly relevant for African economies assessing gas infrastructure, renewable energy expansion and long-term energy resilience.
Closer international cooperation between producer and consumer countries is also essential to manage emergencies and ensure stable energy flows.
In this context, long-term contracts are becoming central again as a tool to reduce exposure to spot market volatility.
