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A widening Middle East conflict looks set to create the most significant disruption for gas markets since Russia’s invasion of Ukraine upended global trade four years ago.

Iran’s neighbours, like Qatar, are some of the world’s most important producers, and the region is also a vital supply route, with 20 per cent of liquefied natural gas exports travelling through the Strait of Hormuz, a crucial choke point for global energy.

LNG trade through the narrow waterway is now all but halted, according to ship-tracking data. Asian buyers – which take roughly a quarter of their LNG from Qatar, the world’s second-largest exporter – have been calling suppliers to check if alternative cargoes are available, according to traders. Egypt, meanwhile, is trying to bring forward shipments, after supplier Israel closed some fields.

“Any naval activity in the Strait of Hormuz will be particularly bullish, as will any developments with Qatari LNG production,” said Tom Marzec-Manser, director of Europe LNG and gas at energy consultancy Wood Mackenzie.

Russia’s invasion of Ukraine in 2022 created unprecedented turmoil in the international gas trade, cutting Moscow off from its largest export market, fuelling volatility and triggering a record rise in prices in Europe and elsewhere.

Shipments to Asia – and Europe – must pass through the Strait of Hormuz. So far, at least 11 LNG tankers going to or from Qatar have paused voyages to avoid the waterway, according to ship-tracking data.

“There is no replacement,” Anne-Sophie Corbeau, a researcher at Columbia University’s Centre on Global Energy Policy, said in a post on LinkedIn. “Will prices spike more in Asia or in Europe? Europe is less exposed, but has low storage levels. It also depends on how much is diverted to Asia.”

Bloomberg