Strait blockade cuts 20% LNG flows

Liquefied natural gas is the part of the energy market getting hit hardest by the Strait of Hormuz crisis. Oil grabs the headlines, but gas is where the chokepoint really bites fast. Qatar and the UAE normally send huge LNG volumes through that narrow passage, and when those cargoes stop moving, buyers in Asia and Europe feel it almost immediately. That is the basic story now — a shipping disruption has turned into a fuel-price shock. ### Why does this strait matter so much? The Strait of Hormuz is a narrow exit from the Persian Gulf, but it handles an outsized share of global energy trade. In 2024, about 20% of global LNG trade moved through it, almost all of that from Qatar and the UAE. Qatar alone shipped about 9.3 billion cubic feet a day of LNG through the route, which tells you why this is not a side issue for the gas market. ### What actually got knocked out? The big hit is Qatari supply. Wood Mackenzie says the closure removed about 1.5 million tonnes of LNG a week from global supply — roughly 19% of global exports. Kpler described Ras Laffan, Qatar’s main LNG export hub, as offline during the disruption, which is the kind of detail that turns a geopolitical scare into a real physical shortage. ### Why did prices jump so fast? Because LNG is not like pipeline gas sitting next door. It has to be liquefied, loaded, shipped, and regasified, so when a major export basin goes missing, replacement cargoes are scarce and slower. S&P Global showed the first leg of that move back on March 2, when the JKM benchmark for Northeast Asia jumped. In March, Wood Mackenzie said Asian spot LNG had surged above $20 per mmbtu. ### Why is Asia more exposed than the U.S.? Because Asia buys most of the Gulf’s LNG. The EIA estimated 83% of LNG moving through Hormuz in 2024 went to Asian markets. Wood Mackenzie says around 90% of LNG exports from Qatar and the UAE are normally destined for Asia, so Japan, South Korea, Taiwan, India, and China are the first places that have to scramble for replacement cargoes. ### Why hasn’t U.S. gas exploded too? The U.S. market is more insulated because Henry Hub reflects domestic pipeline conditions first. The latest EIA data show Henry Hub averaged $3.04 per mmbtu in March 2026, down sharply from January’s $7.72 spike. That does not mean the U.S. is untouched — it means American gas can stay relatively lower even while global LNG prices and storage create a buffer. That last point is an inference from how the U.S. gas market is structured, not a direct market quote. ### So where does the pressure show up next? In freight, insurance, and import bills. S&P Global said insurance premiums on Persian Gulf routes had risen to 15% to 25% of cargo values in early March, and Kpler flagged a $100,000-a-day jump in Atlantic LNG freight rates in a single session. Even if the waterway partly reopens, buyers have already learned that “available supply” is not the same thing as “deliverable supply.” ### Why does this matter beyond gas traders? Because gas-price shocks leak into everything else. Power costs rise. Fertilizer gets more expensive. Industrial users cut demand or pay up. Central banks then have to decide whether an inflation bump is temporary or sticky. The catch is that this shock is coming from logistics and war risk, so it does not fade as quickly as a normal weather move. ### Bottom line? This is not just a Middle East shipping story. It is a reminder that one narrow waterway still sets prices for a fifth of the LNG trade. When Hormuz stops working, the world does not run out of gas — but the cheap, easy gas disappears first.