From Doha to Washington: How Hormuz Redrew Global Gas Supply Chains

At the outset of 2026, the global natural gas market underwent a profound structural shift that eroded much of the stability built over years of rebalancing in the aftermath of the 2022 European energy crisis. Markets had been advancing towards a phase of relative supply abundance, underpinned by expanding liquefaction capacity in the United States (US) and large-scale Qatari projects. This trajectory was abruptly reversed on Feb. 28, 2026, when Operation Epic Fury triggered the most severe energy shock to confront the international system in decades. The US-Israel-Iran War and the closure of the Strait of Hormuz, removed nearly one-fifth of global liquefied natural gas supply from circulation within days.

This paper analyses the structural transformations in the global natural gas market induced by the crisis, tracing supply and demand dynamics before and after the outbreak of the conflict. It further evaluates the implications for key actors within the international energy system, including countries most exposed to global gas market volatility, such as Egypt and Jordan.

Immediately before the crisis, the global natural gas market exhibited the characteristics of a cautious recovery. Global production increased by 2% in 2024 to reach 4.12 trillion cubic metres, while the liquefied natural gas trade expanded by 2.4% to 411 million metric tonnes. This upward trajectory persisted, lifting total volumes to between 422 and 429 million tonnes by the end of 2025. Global liquefaction capacity stood at approximately 494 to 500 million tonnes per annum, driven primarily by newly added United States capacity.

On the supply side, the US consolidated its position as the leading exporter by a clear margin. In 2025, it reached a landmark milestone by surpassing 100 million tonnes for the first time, with exports totalling 111 million tonnes. This expansion was driven by the commissioning of the Plaquemines facility in Louisiana, which alone accounted for more than 60% of the global increase in supply. Australia ranked second at approximately 81 million tonnes, although it faced mounting domestic political pressures and a constrained pipeline of new projects.

Qatar exported approximately 80 million tonnes, while advancing its North Field expansion project, which is designed to raise its liquefaction capacity to 142 million tonnes per annum by 2030. Russia, for its part, maintained a significant presence, with exports of around 33 million tonnes despite ongoing Western sanctions. On the demand side, the European Union emerged as the largest global importer of liquefied natural gas when treated as a single bloc. Its member states absorbed approximately 120 million tonnes in 2025, accounting for 48% of total gas consumption, up from 19% in 2021, reflecting a profound structural shift driven by the Russian supply shock.

China imported between 64 and 70 million tonnes, representing a decline of around 10% compared with 2024. This reduction did not reflect weakening demand, but rather a deliberate strategy to diversify supply sources and expand pipeline imports from Russia and Central Asia. Japan imported approximately 65 million tonnes, continuing a measured downward trajectory as Tokyo advances the restart of nuclear reactors and expands renewable energy capacity. South Korea maintained import levels above 47 million tonnes, while India recorded imports of 24 to 27 million tonnes, with its market remaining highly sensitive to price fluctuations.

On Feb. 28, 2026, the US and Israel launched a joint operation targeting Iran’s military infrastructure. Tehran responded swiftly. The Islamic Revolutionary Guard Corps deployed naval weapons systems and maritime mines to seal the Strait of Hormuz, a critical artery through which approximately 20 million barrels of oil transit daily, as well as more than 110 billion cubic metres of liquefied natural gas annually.

At this juncture, geography alone determined the scale of the disruption. Approximately 93% of Qatar’s exports and 96% of the United Arab Emirates’ exports transited this narrow chokepoint, with no viable alternative routes. By March 6, the strait had been officially closed, and by 9 March, a full shutdown was confirmed, delivering a severe supply shock to global markets.

Financial markets reacted sharply and immediately. Brent crude breached the USD 100 threshold on 8 March, peaking at USD 119.5 the following day, before stabilising near USD 116 by the end of the month, marking an increase of approximately 60% since the onset of the conflict. The most consequential shock to the gas market followed QatarEnergy’s declaration of force majeure at the Ras Laffan liquefaction complex, the world’s largest LNG facility, after infrastructure damage sustained on March 2.

This development withdrew approximately 2 billion cubic metres per week from international supply and eliminated around 5.8 million tonnes of deliveries in March alone, equivalent to 14% of projected global monthly supply. Spot LNG prices in Asia surged by 140% to USD 25.40 per million British thermal units, while the European TTF benchmark jumped by approximately 35% in a single day, reaching its highest level in four years.

The abrupt collapse of Gulf supply triggered an unprecedented reconfiguration of the global gas supplier landscape. The US, geographically insulated from the conflict, emerged as the principal stabilising force within the Western energy system. While international prices surged, the domestic Henry Hub benchmark remained subdued at USD 3.7 per million British thermal units, creating an exceptional margin that drove US liquefaction facilities to operate at full capacity.

In March 2026, US LNG exports reached a record 11.7 million metric tonnes, equivalent to 17.9 billion cubic feet per day, representing an 8% increase over prior projections. The US Department of Energy issued additional emergency export authorisations for facilities such as Plaquemines, while projects including Corpus Christi Stage 3 and Golden Pass accelerated the release of additional volumes. These measures proved critical in preventing the collapse of electricity networks across both Europe and Asia. In effect, US gas shifted from a flexible supplementary commodity to an indispensable pillar of energy security for allied economies.

By contrast, Qatar suffered a severe strategic setback, as the crisis exposed the vulnerability of an export model that is almost entirely dependent on a single maritime corridor. Regardless of the scale of its reserves or the competitiveness of its production costs, such advantages become immaterial when the sole route to market is disrupted. Moreover, the crisis delayed the North Field expansion project, pushing its operational timeline beyond 2027 and deepening medium-term supply constraints.

Russia, meanwhile, managed the crisis with calculated opportunism. Its fossil fuel revenues rose to their highest level in two years, reaching €713 million per day in March 2026. It leveraged its unofficial maritime network, commonly referred to as the “shadow fleet”, to increase oil exports by 115% month-on-month. At the same time, its share of European Union LNG imports increased by 10% despite the ongoing war in Ukraine, with 65% of Russian LNG cargoes delivered in March 2026 discharged at European ports.

On the demand side, responses diverged sharply by country’s level of preparedness and the depth of its energy diversification. The European response proved comparatively resilient relative to its Asian counterparts. The European Union entered the crisis with elevated storage levels and an expanded LNG import infrastructure, which developed rapidly in the aftermath of 2022.

The European Commission and its member states swiftly activated comprehensive emergency protocols, including temperature limits for commercial buildings, speed restrictions on highways, and the promotion of remote working. More critically, European buyers engaged in aggressive bidding for flexible U.S. LNG cargoes on the spot market, sustaining supply at significantly higher cost. At a broader level, the crisis accelerated a decisive shift in energy policy towards renewables, as policymakers increasingly recognised that solar and wind infrastructure is not exposed to chokepoint disruptions.

Across Asia, the severity of the shock varied markedly. China demonstrated notable resilience. Its strategic petroleum reserves, estimated at 1.3 billion barrels, were sufficient to cover approximately three months of consumption, while its extensive pipeline network linking Russia and Central Asia reduced reliance on vulnerable maritime routes. Moreover, as spot LNG prices surged to USD 25.4 per million British thermal units, Chinese power generation shifted pragmatically towards domestic coal, with coal-fired output rising by 2% in March without materially affecting overall demand.

South Korea, by contrast, proved significantly more exposed. Approximately 70% of its oil imports transit through the Strait of Hormuz, while its strategic reserves were revealed to cover no more than 26 days of consumption. The KOSPI index recorded the worst trading session in its 43-year history, and the Korean won depreciated to its lowest level in 17 years. Both Japan and South Korea were compelled to pivot rapidly towards coal-fired power generation, temporarily undermining their respective energy transition targets.

At the regional level, neither Egypt nor Jordan was positioned to absorb a shock of this magnitude. Egypt entered the crisis already confronting a sharp decline in domestic production due to technical challenges at the Zohr field, having shifted from a net exporter to a net importer. Its LNG imports had surged by 300%, reaching 8.9 million tonnes in 2025.

On Feb. 28, 2026, the prospect of missile strikes compelled Israel to shut down the Leviathan field, Egypt’s principal source of imported gas, abruptly severing a supply line that had met approximately 15% of its gas needs. This disruption triggered recurring power outages and acute social strain. In response, the Egyptian government moved to procure three additional LNG cargoes under emergency conditions at elevated wartime prices, while simultaneously importing discounted Russian fuel oil for power generation. This response underscored a structural vulnerability that had accumulated over several years.

Jordan presents a contrasting case. Although it relies on natural gas for approximately 68% of its electricity generation and possesses virtually no hydrocarbon reserves, prior strategic preparedness mitigated the severity of the shock. The government responded immediately by activating the floating storage unit Energos Force at Aqaba, which had entered service in August 2025, enabling the rapid intake of emergency LNG cargoes from international markets. Concurrently, the Ministry of Energy issued directives to switch power generation facilities to diesel and fuel oil, drawing on secondary fuel reserves maintained over the past decade.

The 2026 crisis exposed a critical flaw long overlooked in international risk models: low production costs are rendered irrelevant when delivery routes remain vulnerable to asymmetric disruption. The “Hormuz trap” challenged a core assumption underpinning global procurement strategies: that the strait’s economic importance would ensure its continued openness. The early days of the crisis demonstrated that a single regional actor can disrupt one-fifth of global LNG supply, positioning Qatar as the principal strategic loser.

By contrast, the United States has emerged as the foremost strategic beneficiary. What had previously been perceived as a pricing disadvantage, the premium attached to United States gas relative to Qatari supply, is now increasingly viewed as an unavoidable insurance cost for sovereign supply security. This shift is set to entrench a structural move towards long-term contracting with United States suppliers, thereby reinforcing American dominance over global gas trade for decades to come.

More fundamentally, the 140% price shock has reshaped policy calculations across major energy-consuming capitals. While the immediate response in parts of Asia involved a temporary reversion to coal, the longer-term effect has been to accelerate investment in domestic renewable energy capacity.

Finally, the “twin shocks” of the third decade of the twenty-first century, namely the loss of Russian gas in 2022 and the disruption of Gulf supply in 2026, have generated unprecedented financial incentives driving industrial economies towards a clear strategic conclusion: genuine energy security can only be achieved through deeper reliance on domestically produced clean energy. In this context, the market is expected to witness the following developments:

• Increased reliance on nuclear energy over the next five years.
• A relative decline in Qatari gas prices compared with rising US gas prices.
• Accelerated deployment of renewable energy infrastructure, accompanied by sharp increases in input costs.
• Intensifying competition over critical minerals and rare earth elements required for renewable energy generation and storage.

In sum, Operation Epic Fury and the subsequent closure of the Strait of Hormuz constituted a severe stress test that exposed deep-seated structural fragilities within the international energy system. The crisis has reshaped the competitive balance among suppliers, exposed the limitations of prevailing risk models, and redefined import priorities among major consumers. Its most profound consequence, however, lies not in the short-term redistribution of market shares, but in the redefinition of energy security itself for governments, corporations, and investors alike. If the primary lesson of the 2022 shock was that reliance on a single supplier is untenable, the lesson of 2026 is more consequential: global energy systems must not depend on a single transit corridor.

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