Are we heading for an LNG glut or an LNG shortage in the next few years?

Both outcomes are plausible, depending on timing. In the near term, the closure of the Strait of Hormuz and damage to Qatar’s Ras Laffan facility have tightened supply, shifting 2026 expectations from potential oversupply into a likely deficit. That said, the longer-term story remains dominated by new capacity. The US is adding large volumes, and major expansions are planned in Canada, Mozambique and Argentina. As these projects come online from 2028–2029, price pressure and weaker seller leverage become more likely, particularly if demand growth disappoints.

How is the Strait of Hormuz disruption reshaping global LNG trade and contracting?

The Strait of Hormuz is a critical transit route, and its closure has interrupted roughly a fifth of global LNG trade, based on 2025 volumes. This has created immediate availability constraints for importers and pushed geopolitical risk to the forefront of procurement decisions. It also changes how buyers and sellers think about portfolio resilience, destination optionality and the reliability of specific supply corridors. With QatarEnergy declaring force majeure after the Ras Laffan strike, counterparties are likely to scrutinise force majeure language, shipping and rerouting contingencies, and the commercial value of flexibility more intensely than during stable market periods.

Which countries are driving LNG supply growth, and where are the key capacity expansions?

The US remains the anchor of supply growth, having built export dominance since the shale boom and continuing to move towards a far higher share of production being exported by 2030. Beyond the US, several new or expanding basins are positioning for market share. Canada is targeting significant export capacity by 2030 and potentially much higher liquefaction capacity in the early 2030s, benefiting from lower transit risk. Mozambique has multiple projects with first LNG expected in 2028–2029, and Argentina could reach sizeable capacity by the early 2030s with advantaged routes to South Asia.

What is driving LNG demand growth, and why are forecasts so uncertain?

Demand is supported by structural themes, but the path is uneven. The International Energy Agency expects global gas demand growth into 2026, led by China and emerging Asian markets. Two frequently cited growth areas are maritime transport, where LNG displaces higher-emitting marine fuels, and power demand linked to data centres and AI. However, demand is vulnerable to geopolitics and price. High prices and insecurity can also drive coal reversion and faster renewables adoption, creating lasting demand destruction in price-sensitive markets.

If an LNG glut occurs later this decade, what will it mean for prices and commercial terms?

A glut would typically depress spot prices, flatten the forward curve and shift negotiating power towards buyers. While lower prices can benefit importers, they can also fall below long-run production costs, putting pressure on higher-cost exporters and potentially squeezing certain basins out of the market. Commercially, sellers are likely to defend revenue through fixed liquefaction or capacity fees, tighter cancellation rights and longer notice periods. Buyers will push for flexibility, including mechanisms such as downward quantity tolerance, though sellers may limit it or attach make-up obligations and swing fees. Operational flexibility, including modular and floating solutions, becomes a competitive advantage.