Wood Mackenzie sees prolonged LNG market uncertainty after Hormuz disruption

By Romel S. Gurky

The global LNG market faces years of uncertainty following the closure of the Strait of Hormuz, which has removed more than 80 million tonnes per annum (Mtpa) of LNG supply from world markets, according to a new analysis by consultancy Wood Mackenzie.

The disruption, equivalent to about 20% of global LNG supply, has prompted Wood Mackenzie to develop three market scenarios ranging from a rapid resolution of the conflict to a prolonged period of disruption extending beyond 2027.

"The Strait of Hormuz closure has done more than remove LNG from the market. It has removed certainty," Kateryna Filippenko, Research Director for Global Gas Markets at Wood Mackenzie, said in the report.

Under the most optimistic "Quick Peace" scenario, Gulf LNG facilities would restart in June 2026 and return to full capacity by 2027. A second scenario, dubbed "Summer Settlement", assumes a reopening of the strait in September 2026, with full capacity restored by 2028.

In the "Extended Disruption" scenario, recurring conflict and infrastructure damage would prevent Gulf LNG production from returning to previously expected growth levels. Major projects, including Qatar's North Field West expansion, could face indefinite delays, while no new pre-final investment decision projects would proceed in the region.

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Despite the Middle East disruption, Wood Mackenzie said global LNG supply growth would continue, supported by projects elsewhere. More than 150 Mtpa of LNG capacity is currently under construction outside the Persian Gulf, primarily in the United States, while an additional 30 Mtpa is expected to reach final investment decision by the end of 2027.

The consultancy said LNG demand is expected to grow under all three scenarios, driven by declining domestic gas production and lower pipeline imports in Europe as well as South and Southeast Asia. However, some LNG-importing countries may seek to reduce dependence on imported LNG, creating long-term demand uncertainty.

According to the analysis, LNG markets could begin to soften from 2028 under the Quick Peace scenario, potentially leading to cancellations of U.S. LNG cargoes between 2031 and 2033 to balance the market. Under the Summer Settlement case, the oversupply period would likely be delayed by about a year.

The Extended Disruption scenario would keep markets exposed to elevated geopolitical risks and price volatility through the end of the decade, although a subsequent wave of LNG projects outside the Middle East could eventually create oversupply risks if demand growth weakens.

Wood Mackenzie said the key challenge for market participants is not predicting which scenario will unfold, but ensuring that supply portfolios and procurement strategies remain resilient across a range of potential outcomes.

Editing by Alexander Ginting