From disruption to structural crisis: As the blockade nears the end of its third week, we turn our attention to how markets are reacting — and what decision-makers should watch next. The effective closure of Hormuz has pushed the global LNG market into its most volatile period since the 1970s. What began as a security risk has evolved into a structural supply shock — removing 20% of global LNG supply overnight.

Where do we stand? The closure of the strait has locked in 1.5 mt per week from global LNG supply. Some 90% of Qatar and the UAE’s LNG exports are destined for Asia –– leaving the region the most exposed to the disruption. “Crisis conditions are current, not pending,” Davenport Energy Portfolio Manager Toby Copson (LinkedIn) told EnterpriseAM. “The absence of meaningful flexible replacement volumes means the market has no buffer,” he added.

The crisis clock: How long do we have?

We are currently in a buffer window that is rapidly closing as physical arrivals cease. The final Qatari LNG cargoes loaded before the February 28 strikes are expected to reach Asian terminals by mid-March. Once these are discharged, the physical shortfall is expected to begin in earnest.

Brace for impact: Most LNG contracts are linked to oil prices on a three-month lag, the true cost spike for consumers will not hit hot until June 2026, analysts at Wood Mackenzie warn.

The two-month threshold: If the disruption exceeds two months –– lasting into mid-May –– demand destruction becomes inevitable, according to data from Mackenzie. Asia’s LNG market demand is also expected to fall to nearly 5 mt though 3Q 2026. However, Qatari production is expected to gradually ramp its production up to “pre-crisis levels by the end of May.”

The impact will be case-by-case: Some major importers like Japan held roughly 22 days of supply in reserve as of 1 March, whereas others like South Korea hold strategic petroleum and energy reserves equivalent to roughly 200 days, but just-in-time LNG deliveries are far more fragile.

Asia is moving out of their shoulder season and Europe entering injection season, meaning “competition for spot cargoes is likely to remain intense through May and June as players work to rebalance portfolios and refill storage,” S&P Global Atlantic LNG manager Aly Blakeway (LinkedIn) told EnterpriseAM. Flat prices for NWE LNG have “jumped nearly 69% since 27 February, the day before the conflict started, while LNG spot prices in JKTC jumped 85%,” he added.

Force majeure: The energy market domino effect

Asia LNG spot prices immediately surged past USD 22.50 per mn Btu –– the highest level since it last peaked in 2023. Risk is cascading down the supply chain, with India’s Petronet LNG already invoking force majeure, highlighting the lack of viable substitute supply.

On a larger scale: “European and North Asia spot prices [are] near doubling as Qatari volumes drop out of the market,” Copson added. Buyers are being driven to chase an “already thin spot market at significantly elevated prices, while freight costs surge as tankers reroute. The knock-on effect is felt across power generation, industrial feedstock and fertiliser production.”

Can refineries just un-declare force majeure? Production restart at Qatari facilities alone carries “a minimum 4-6 week lead time under optimistic conditions,” and market pricing will remain “elevated well beyond that as confidence in supply security slowly rebuilds,” Copson explained. Therefore, even if a diplomatic resolution is reached, we’re looking down a long road before a return to normalcy, due to the technical challenges of restarting facilities that have reduced output.

We have another prediction: Looking ahead, “the market is closely watching restart timelines,” Blakeway  added. “In a best-case scenario, Qatari liquefaction could begin to come back within 6-7 weeks accounting for the restart of all the trains and liquefaction process, but even then, flows will ramp gradually,” Blakeway said.

For your eyes only: EnterpriseAM sat down with energy analyst at CMS Commodities Sacha Foss to run through everything oil and force majeure.

Any luck in getting around the blockade? While Saudi Arabia can reroute some crude via the East-West Pipeline to Yanbu, Qatar has no alternative export terminal outside the Gulf for its LNG. So far, negotiating seems to be the only hope.

Where do we go from here

The buyers are scrambling: For Atlantic Basin cargos to be shifted from Europe to Asia, a sustained premium would be required, yet current forward curves imply at least a month of disruption, with prices easing from June. Given Asia’s heavy reliance on Qatar, with around 83% of its LNG exports flowing to Japan, Korea, Taiwan and the wider region, “buyers will need to bid aggressively to pull flexible FOB cargoes from the US and West Africa away from Europe,” Blakeway explained.

Russia and US exporters are the clear near-term beneficiaries — “price-sensitive nations in South and Southeast Asia are the immediate casualties, effectively priced out of the spot market entirely,” Copson explained.

When conflict de-escalates, LNG shipping routes will have some coarse correction “as soon as options are available, like developments in BC Canada and Argentina,” Jht Consulting LLC Founder Javid Talib (LinkedIn) told EnterpriseAM. “US GOM facilities are already ramping up and increasing volumes coming online in the next five years have almost been contracted,” he added. That said, global exporters will benefit from "preferential contracting,” as buyers scramble to find alternative uptake points.

Alternative supply sources cannot fully replace Qatari volumes — despite efforts to source additional cargoes. Plummeting demand is likely, particularly through higher coal utilization in power generation and reduced industrial consumption to mitigate the crisis.

Qatar was… almost there: Qatar was on the verge of launching its massive North Field Expansion project –– slated to boost exports by 40% by 2027. Given the growing regional tension and subsequent uncertain length of production halts, Qatar may “have to recalibrate the progress,” Talib said. Just last week, Qatar Energy slowed work at the site, cutting down workers by half due to security concerns.

Supply chain trickle-down: From pipelines to pockets

Utilities across Europe and North Asia are simultaneously absorbing spot LNG at record levels — “meaning both industrial input costs and household energy bills are moving higher concurrently and consumers will feel this from multiple directions simultaneously,” Copson added.

“Buyers have been forced to bid aggressively for flexible cargoes to meet domestic demand,” Blakeway explained, with LNG markets “across the world pricing in competition for cargoes as 20% of global supply remains curtailed.”

India has already begun gas rationing for energy-intensive sectors — like refining and petrochemicals to prioritize domestic consumption. “Gas-intensive industries including petrochemicals, fertilizers, and plastics are repricing feedstock costs in real time, with downstream price increases inevitable within weeks,” Copson said.