By Ginika Igboke
Liquefied natural gas (LNG) prices across Europe and Asia have climbed sharply following the closure of the Strait of Hormuz, creating a widening gap with relatively stable prices in the United States. According to an April 28 statement from the U.S. Energy Information Administration, the disruption has significantly tightened global supply and intensified competition for available cargoes.
European and Asian Prices Spike
In Europe, LNG futures tied to the Title Transfer Facility rose to $14.80 per million British thermal units (MMBtu) for the week ending April 24. This marks a 35 percent increase compared to levels prior to the closure of the strait.
The surge has been even more pronounced in Asia. Prices linked to the Japan-Korea Marker jumped 51 percent over the same period, reaching $16.02/MMBtu. The sharp rise reflects heightened demand from Asian buyers scrambling to replace disrupted supplies, particularly from the Middle East.
U.S. Prices Move in the Opposite Direction
While global markets tighten, U.S. natural gas prices have moved in the opposite direction. At the Henry Hub, prices have fallen by approximately 9 percent since late February.
The divergence is largely due to domestic factors, including ample seasonal storage and limited short-term capacity to expand LNG exports. With U.S. export terminals already operating near maximum capacity, additional supply cannot easily be redirected to global markets, keeping domestic prices relatively contained.
Conflict Disrupts Critical Energy Route
The price surge is closely tied to the ongoing conflict involving Iran, which began on Feb. 28 and has severely disrupted maritime traffic through the Strait of Hormuz—a vital artery for global energy trade. The waterway is a key transit route for LNG shipments from major producers such as Qatar and the United Arab Emirates.
According to the International Energy Agency, a prolonged closure of the strait effectively strands LNG exports from these countries, which together account for a significant share of global supply. Since the conflict began, Iranian military activity targeting commercial vessels has further hindered shipments, while U.S. naval actions have added to the tension in the region.
Although a ceasefire has been announced, there is still no clear resolution, leaving markets on edge and supply chains strained.
Supply Losses and Market Strain
The EIA estimates that more than 10 billion cubic feet per day of LNG supply—roughly 20 percent of global output—has been affected by the disruption. Much of this shortfall stems from halted exports at Qatar’s Ras Laffan facility, one of the world’s largest LNG hubs.
“No laden LNG vessels are known to have crossed the strait between March 1 and April 24,” the agency reported. During this period, QatarEnergy declared force majeure, a contractual provision that allows companies to suspend obligations due to extraordinary circumstances.
As a result, Asian buyers—who rely heavily on Qatari gas for over 80 percent of their imports—have been forced into the spot market, intensifying competition and pushing prices higher worldwide.
Limited Alternatives and Slow Recovery
Even if the Strait of Hormuz reopens fully, analysts warn that supply disruptions could persist. Restarting LNG production and export operations, particularly in Qatar, will take time, meaning the market may remain tight in the near term.
Financial analysts, including those at ING Bank, note that there are few viable alternatives to offset the lost volumes. While the United States is expected to increase LNG exports, the EIA cautions that any additional supply will cover only a small portion of the deficit.
High utilization rates at U.S. LNG terminals further limit the country’s ability to respond quickly to global shortages, reducing the likelihood of significant price increases domestically despite global pressures.
Oil and Gasoline Prices Also Climb
The disruption has not been limited to natural gas markets. Crude oil prices have surged in tandem, reflecting broader concerns about energy supply. Brent crude, which traded around $72 per barrel before the conflict began, rose to approximately $109.67 by April 29.
Rising oil prices have translated into higher fuel costs for consumers. According to data from the American Automobile Association, the average price of regular gasoline in the United States reached $4.23 per gallon on April 29, up from $3.98 a month earlier. In several states, including Nevada, Oregon, Washington, Hawaii, and California, prices have exceeded $5 per gallon.
Officials Offer Mixed Outlook
During an April 23 press conference, Donald Trump acknowledged that Americans may face elevated gasoline prices for a period due to the ongoing conflict. However, Scott Bessent expressed optimism that the situation would stabilize, predicting that fuel prices would eventually return to previous levels or potentially fall even lower.
Outlook for Global Energy Markets
The current disruption underscores the vulnerability of global energy markets to geopolitical shocks, particularly in critical transit regions like the Strait of Hormuz. With limited spare capacity and few immediate alternatives, LNG and oil markets are likely to remain volatile in the near term.
As the conflict evolves, traders and policymakers alike will be watching closely for signs of de-escalation or further disruption—both of which could have far-reaching implications for energy prices and global economic stability.
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