Persian Gulf LNG Last Ship Arrives Soon, Global Natural Gas Supply Nears Cliff Edge

The last batch of LNG cargo from the Persian Gulf destined for Asian and European importers is about to arrive, and supply cliff effects are emerging. Natural gas prices have doubled, and countries highly dependent on imports, such as Pakistan, are facing “supply disruptions.”

After Iran blocked the Strait of Hormuz and launched missile attacks on Qatar’s largest liquefied natural gas (LNG) facilities, the global LNG supply landscape has suffered structural shocks. According to independent shipbroker Affinity, LNG cargoes from the Persian Gulf that were already en route before the outbreak of war will arrive over the next 10 days, after which some importing countries will lose all supply from the region.

The market has responded first. Since the outbreak of war, the Asia-Pacific LNG benchmark price, Platts JKM, has doubled to about $23 per million British thermal units, with shipping costs also soaring due to higher charter rates and longer alternative routes. Qatar’s Energy Minister Saad Al-Kaabi stated this week that, due to the attack, 17% of Qatar’s LNG capacity will remain offline for the next three to five years, and some long-term contracts may be declared force majeure.

This situation will force global importers to make difficult choices among competing for alternative supplies from the U.S. and other sources, switching fuels, and implementing demand rationing. Many energy-scarce Asian countries have already begun energy-saving measures, with some even adopting four-day workweeks.

Supply Cliff Approaching, Last Cargoes Countdown

According to vessel tracking data, a batch of LNG cargoes from the Persian Gulf is still scheduled to arrive in Asia—typically consuming about 90% of the region’s LNG exports; another six cargoes are en route to Europe. Once these cargoes are delivered, supply from the Persian Gulf will be completely cut off.

Qatar produces about one-fifth of the world’s LNG. After the Strait of Hormuz was blocked, Qatar was forced to halt exports. This week, Iran’s missile attacks further targeted Qatar’s Ras Laffan LNG plant, which accounts for most of Qatar’s LNG production capacity. Al-Kaabi noted that this damage will cause long-term impairment of Qatar’s LNG capacity and explicitly announced force majeure on some long-term contracts, potentially lasting up to five years. This means the structural supply gap in the global LNG market will persist for years rather than months.

Pakistan Faces Deepest Crisis, Supply to End by Month’s End

Among all affected countries, Pakistan is the most vulnerable. Last year, about 99% of its LNG imports came from Qatar. The last cargo from Ras Laffan arrived on the second and third days after Iran’s war began.

Currently, the handling capacity of Pakistan’s two LNG import terminals has fallen to one-sixth of normal. According to insiders, both terminals will cease gas distribution entirely by the end of this month. One terminal operated by Pakistan GasPort’s Chairman and CEO Iqbal Ahmed said it will run out of LNG inventory in the coming days. “After that, we will be completely cut off,” he said. “We don’t know when the next cargo will arrive.”

Iqbal Ahmed predicts that if the conflict continues, Pakistan will turn to more expensive and more polluting fuel oil for power generation. “I foresee a very difficult year ahead, followed by two to three years of hardship,” he said. Bangladesh faces a similar situation, but since some LNG imports come from outside the Persian Gulf, the situation is slightly better. The government has already implemented gas rationing measures, including shutting down universities.

Although Japan is the world’s second-largest LNG importer, its supply through the Strait of Hormuz accounts for only about 6%, which is relatively low. A Japanese LNG trader said, “Our plan is to procure in the JKM spot market to fill the gap.” However, another trader revealed that Japanese buyers are generally cautious and plan to return to coal, “only a few buyers are considering spot purchases.” Japan also plans to expand coal-fired and nuclear power, having partially restarted its largest nuclear plant in Niigata Prefecture earlier this year.

Prolonged Tight Supply, Structural Market Pressure

Until more ships are permitted to pass through the Strait of Hormuz, global LNG supply will remain tight. Even if the strait reopens, the damage to Ras Laffan means Qatar’s approximately 17% of LNG capacity will not recover within three to five years, keeping market supply below pre-war levels for the foreseeable future.

Al-Kaabi’s declaration of force majeure indicates that buyers holding long-term Qatar contracts will have to rely on the spot market to fill the gap for years. The JKM spot price in Asia has doubled compared to pre-war levels, further increasing energy costs for importing countries. For vulnerable developing countries with fragile finances, the high spot prices and limited foreign exchange reserves will pose a core challenge to energy security in the coming years.

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