Global gas markets confront their most severe disruption since 2022 amid the conflict involving Iran.

The global energy industry is preparing for its most serious upheaval since the 2022 invasion of Ukraine. As tensions in Iran intensify, the Strait of Hormuz — the world’s most vital transit route for liquefied natural gas (LNG) — has effectively come to a standstill.

Vessel-tracking data shows that at least 11 large LNG carriers have suspended their journeys. Major Japanese shipping firms, including Nippon Yusen K.K. (TYO:9101) and Mitsui OSK Lines Ltd (OTC:MSLOY), have reportedly instructed their ships to remain in safer waters. Iranian state media has characterized the passage as “virtually closed,” leaving roughly 20% of global LNG supply stranded behind what amounts to a naval blockade. Unlike oil, which can sometimes be diverted through pipelines, the immense volumes of Qatari gas moving through this narrow corridor have no viable alternative route.

Asia’s exposure and price shock

Asian nations are at the forefront of the fallout. Buyers in China, India, and Japan — the largest importers of Qatari gas — are said to be urgently seeking substitute cargoes from other suppliers. Yet in an already tight market, traders expect a sharp surge in spot LNG prices, potentially undoing a year of relative price stability within days.

The strain extends beyond spot purchases. Many long-term LNG agreements are linked to crude benchmarks, so any spike in Brent Crude would quickly drive up costs even for contracted volumes, raising energy bills for households and industrial users alike.

Supply risks and broader regional strain

The disruption is also creating operational risks for producers. LNG export terminals depend on a continuous rotation of tankers to maintain cooling systems; without outbound shipments, producers in Qatar and the UAE could face partial or full production shutdowns.

The ripple effects are spreading beyond the Gulf. With Israeli gas fields closed and Iranian pipeline exports to Turkey under pressure, countries such as Egypt are being pushed into the higher-cost seaborne LNG market.

The result is a global scramble for the limited cargoes still available, setting the stage for an international bidding war. Whether the conflict widens or remains contained, the financial burden is likely to be passed on to consumers around the world.

Sources: Simon Mugo