Don’t Just Watch Oil — the "Hormuz Crisis" Threatens LNG Even More

Key angle: LNG’s unique vulnerability

The closure of the Strait of Hormuz (霍尔木兹海峡) has immediate effects on oil markets. But the bigger, longer‑running threat may be to liquefied natural gas. Why? Because LNG flows are both more concentrated and far harder to re‑route than crude. It has been reported that roughly 20% of global LNG transits the Hormuz choke point, much of it coming from Qatar. And QatarEnergy (卡塔尔能源公司) has reportedly suspended operations at its Ras Laffan (拉斯拉凡) complex after a recent military strike, declaring force majeure.

Market reaction and limited substitutes

Markets reacted violently. European gas prices jumped about 63% in a single week, the largest weekly spike since the start of the Ukraine war in 2022, and Asian spot LNG was trading above $23/MMBtu. Shipments are already being reallocated — some cargoes destined for Europe have turned back toward Asia as regional price spreads widened. Unlike crude, which can in some cases be rerouted overland via pipelines from Saudi Arabia or the UAE, LNG has no comparable long‑distance pipeline alternative; long‑haul natural gas really needs specialized LNG carriers.

Technical and insurance constraints make recovery slow

Analysts warn restarting LNG is not like firing up an oil well. Rapidan Energy’s global gas and LNG head Alex Munton says LNG liquefaction plants are highly industrialized cold‑chain operations; a shutdown can take weeks to reverse, not days. Shipping risk compounds the problem: an LNG carrier can cost up to $250 million, and insurers and charterers will demand near‑certainty of safe passage before sending tonnage through a contested Strait. It has been reported that the U.S., the world’s largest LNG exporter, is already near capacity, leaving little spare supply to plug a sudden global shortfall.

Geopolitics and broader implications

This is not just a markets story. The incident sits at the intersection of regional hostilities (including Iran’s role), maritime security, and the insurance and trade regimes that underpin global energy flows. Further hostile action against Qatar’s facilities could inflict long‑lasting damage on global gas supplies — and force demand destruction or fuel switching (for example, back to coal) to rebalance markets. For energy‑importing countries in Europe and Asia, the question is stark: can diversification and stockpiles shield them from a single‑node failure in the Gulf, or will the Hormuz crisis reshuffle the world’s gas trade for years to come?