LNG Price Up Six Times, US Refineries Mint Money
Even the largest global supplier of
liquefied natural gas can’t make up for the shortfall since the war in Iran cut
off an important source.
2.
Qatar halted LNG exports from its key Ras Laffan plant, with 17% capacity damaged,
worsening supply shortages.
3.
LNG prices in Europe
and Asia have surged to up
to 6× U.S. prices, increasing energy costs for countries like
Italy, Taiwan, and South Korea.
4.
The United States, despite being the largest LNG exporter, cannot increase supply
due to fully utilized
export capacity.
5.
New U.S. LNG terminals (mainly in Texas and Louisiana) are
under construction but will take years
to become operational.
6.
This marks the second
major global gas disruption after the Russia-Ukraine War
impacted European gas supplies.
7.
Global LNG demand remains strong due to:
o Rising electricity
needs (including AI/data centers)
o Transition away from
coal
o Backup for renewable
energy
8.
Prolonged disruption could force countries to:
o Ration energy
consumption
o Switch to alternative fuels
o Accelerate renewable energy adoption
9.
The International Energy Agency warns that damage to
Qatar’s facilities could delay
global LNG supply growth by at least two years.
10. Energy companies are
responding with new investments (e.g., Shell acquiring Canadian gas assets),
but supply constraints persist in the near term.
11. U.S. gas prices may
remain relatively stable ($3–$4/MMBtu), though some forecasts suggest a rise to
$5 if
export capacity expands significantly.
12. Early signs show reduced gas usage in Europe
and increased adoption of renewables
like wind, hydro, and solar.
Overall Insight:
The crisis highlights the fragility
of global LNG supply chains, where geopolitical chokepoints can
trigger widespread economic impact, and reinforces the long-term shift toward energy diversification and renewables.
[ABS News Service/28.04.2026]
The
closure of the Strait of Hormuz has cut off a significant source of liquefied natural
gas, but the United States, the biggest exporter of the fuel, is unlikely to pick
up that slack because it has no spare capacity.
A
two-month pause on L.N.G. shipments from Qatar, a Persian Gulf country near the
strait, has caused prices to surge across Europe and Asia. That is spreading significant
economic pain because places like Italy, Taiwan and South Korea depend on the fuel
to produce electricity, heat homes and run industrial plants.
This
is the second time in less than five years that global natural gas markets have
been severely disrupted. In 2022, Russia began choking off the piped gas it used
to send to European countries around the time of its invasion of Ukraine.
U.S.
companies went to Europe’s rescue and are expected to bring new L.N.G. capacity
online in the coming months and years. But analysts said those efforts would not
nearly be sufficient to make up for the loss of Qatari gas if the strait did not
reopen soon, forcing importers to ration and turn to other sources of energy.
“All
of the L.N.G. that is exported from the U.S., it’s at full capacity,” said Massimo
Di Odoardo, vice president of gas and L.N.G. research at Wood MacKenzie, an energy
research firm.
Since
the war in Iran began on Feb. 28, prices for L.N.G. shipped to Europe and Asia have
climbed to as much as six times the price of natural gas in the United States. In
the months before the war, they were less than four times as high.
The
United States is building several export terminals where natural gas is chilled
to minus 260 degrees Fahrenheit, turning it into liquid that can be loaded onto
oceangoing tankers. But these projects, most of them in Texas and Louisiana, cost
billions of dollars and take several years to complete.
Natural
gas supplies roughly a quarter of global energy, according of the International
Energy Agency. Demand had been climbing worldwide alongside the use of electricity,
driven in part by data centers used for the development
of artificial intelligence. Some countries are also using natural gas, which is
mostly composed of methane, to replace coal and provide power when there is insufficient
solar or wind energy.
But
importing liquefied natural gas is expensive even in good times. Countries have
to build terminals to turn it back into gas and pipelines to get it from coasts
to power plants, homes and factories.
Now
the war is making reliance on the fuel much more expensive.
The
United States and Iran remain in a standoff over the Strait of Hormuz, where the
U.S. military is blockading ships linked to Iran and Iran is effectively stalling
ships carrying oil, L.N.G. and other goods from the Persian Gulf to the rest of
the world.
The
war caused Qatar to stop making L.N.G. at its Ras Laffan plant, one of the most
important energy assets in the region. Missiles later damaged 17 percent of the
plant’s capacity.
Gas
executives say they are optimistic that new capacity under construction will eventually
ease the strain. But analysts caution that an extended closure of the strait — through
which 20 percent of all L.N.G. passes — and yearslong repairs to Ras Laffan could
keep gas prices high for a long time.
In
addition, the damage to Qatar’s gas export operations could delay by at least two
years the growth of L.N.G. supply that was expected before the war, the International
Energy Agency said on Friday.
North
America broadly has been driving the global growth in L.N.G., providing three-quarters
of the increase in supply last year, according to the energy agency. Australia is
another big exporter.
Energy
companies have been on the hunt for more gas reserves around the world. Shell, based
in London, announced on Monday a $16.4 billion acquisition of ARC Resources, a Canadian
company that produces natural gas in Alberta and British Columbia. Some of that
gas is exported as L.N.G. from a terminal on the coast of British Columbia.
U.S.
terminals exported almost 18 billion cubic feet a day in March, close to the record
set in December, according to the Energy Information Administration. The terminals
cannot easily export much more without deferring regular maintenance and more quickly
starting new projects.
U.S.
exports are projected to increase 18 percent this year and 10 percent next year,
the Energy Information Administration estimates. Five new L.N.G. terminals plan
to start operations by the end of next year.
Industry
executives contend that U.S. investment in natural gas has positioned the country
for a long period of low domestic prices even as exports rise. Some projections
indicate that U.S. natural gas prices could remain in the range of $3 to $4 per
million British thermal units for decades.
“From
the U.S. natural gas industry’s perspective, we’re in a really good place today,
tomorrow and far into the distant future,” said Karen Harbert, president and chief
executive of the American Gas Association.
But
some analysts say prices in the United States could increase to as much as $5 per
million British thermal units if energy companies build all of the export capacity
they are planning to.
“I
would say that in the long run, there isn’t enough supply at the current price point
to accommodate all the build-out of L.N.G. capacity and gas-for-power demand from
data centers,” Mathieu Utting, lead L.N.G. and natural
gas analyst at Rystad Energy, a research and consulting firm.
If
natural gas prices rise in the United States and the rest of the world, some countries
may decide they are better off investing more in renewable energy and large batteries.
A report by Ember Energy, a nonprofit research group, says China exported record
numbers of solar panels in March, suggesting some countries are already moving in
that direction.
The
disruptions caused by the war have prompted some Asian countries to switch to other
fuels, International Energy Agency said. And preliminary data suggests that Europe’s
use of natural gas in March fell about 4 percent from a year earlier. The region’s
power sector used less gas as it enjoyed a relatively strong increase in wind and
hydroelectric production.
“Every
single country dependent on L.N.G. today is absolutely assessing that relationship,”
Julie McNamara, director of federal energy policy for the Union of Concerned Scientists.
“This is such a vulnerable place to be for any given country.”