Asia faces LNG supply shock, price volatility on Hormuz closure

LNG shortages intensify as trade routes and pricing shift globally.

Asia faces direct exposure to supply loss and resulting price volatility as a major liquefied natural gas (LNG) importing region, Wood Mackenzie said in a report.

This comes as the firm modelled three global LNG market scenarios after the closure of the Strait of Hormuz removed more than 80 million tonnes per annum (Mtpa) of LNG from world markets, equal to 20% of global supply.

The report outlines three scenarios: Quick Peace, Summer Settlement, and Extended Disruption, based on different timelines for the reopening of the strait and recovery of Gulf LNG exports.

Demand continues to grow across all scenarios, supported by declining domestic production and falling pipeline imports in Europe, and South and Southeast Asia.

“Efforts to reduce LNG import dependency are expected to remain uneven and will face implementation challenges, with more structural change in Europe and Northeast Asia likely only after 2030,” the report said.

Under Quick Peace, the Strait of Hormuz reopens in June 2026 and Gulf LNG facilities return to full capacity by 2027, with markets beginning to soften from 2028.

Under Summer Settlement, reopening shifts to September 2026 and full capacity returns by 2028, with market imbalance extending by around one year.

Under Extended Disruption, conflict and infrastructure damage curb Gulf LNG growth, delay projects, and postpone North Field West indefinitely, with tight conditions through 2030 followed by oversupply risk as new supply enters and demand growth slows.

Global LNG supply growth is also likely to return under all three scenarios, with over 150 Mtpa of LNG capacity under construction outside the Persian Gulf, mainly in the US, with a further 30 Mtpa expected to reach final investment decision by the end of 2027.