The writer is head of gas and LNG analysis at Wood Mackenzie
Military action by the US and Israel against Iran — and Tehran’s response — have inevitably upended the global oil market. But the impact of the conflict could prove even greater for consumers of gas and liquefied natural gas. The 81mn tonnes (110bn cubic metres) of LNG shipped through the Strait of Hormuz last year made up about a fifth of global supply, a greater share than that for oil exported through the same sea lane. On Monday, QatarEnergy, the state-owned petroleum company of Qatar, announced the temporary closure of its LNG facilities.
The disruption to LNG flows has sparked concerns across both Europe and Asia, tightening the global market and reigniting competition between the world’s two major regional LNG markets for available cargoes. While most of the LNG cargoes transiting the Strait are contracted into Asian markets, the repercussions will be keenly felt across Europe. More than two-thirds of the way through the northern hemisphere winter, European storage levels are well below seasonal norms and about 10 per cent lower than at the same point last year following low temperatures through January.