International LNG Prices Rise Amid Strait of Hormuz Closure

International liquefied natural gas (LNG) prices have surged in Europe and Asia following the closure of the Strait of Hormuz at the end of February, a critical chokepoint for global energy supplies. European benchmark prices at the Title Transfer Facility (TTF) rose by 35% to $14.80 per million British thermal units (MMBtu), while the Japan-Korea Marker (JKM) in East Asia jumped 51% to $16.02/MMBtu. In contrast, US natural gas prices at the Henry Hub benchmark have fallen by 9% over the same period, reflecting ample domestic supply and limited capacity to increase LNG exports. The closure has disrupted approximately 20% of global LNG supplies, mainly from Qatar’s Ras Laffan export facility, with no LNG vessels reported to have passed through the strait since March 1. This has forced Asian buyers, who import over 80% of Qatari gas, to compete for spot cargoes on the global market to replace lost contract volumes. The US Department of Energy has responded by approving incremental increases in LNG export capacity to non-free trade agreement countries, including expansions at the Plaquemines and Elba Island terminals, although these additions only partially offset the supply shortfall. US LNG exports remain near record levels, with March shipments reaching an estimated 17.9 billion cubic feet per day (Bcf/d) and terminal utilisation at 94% of DOE-approved capacity. Despite this, the potential for further export growth is constrained by high utilisation rates and limited additional liquefaction capacity, which is expected to increase only gradually with new projects coming online later in 2026. Consequently, US domestic prices have remained relatively stable and even declined as the winter heating season ended. European natural gas storage levels finished the winter season significantly below the five-year average, at just 28% full, increasing the likelihood of continued demand for spot LNG cargoes to replenish inventories ahead of next winter. Meanwhile, Asian storage capacity is more limited, making prices in the region more sensitive to weather-driven demand fluctuations. The ongoing supply disruption and elevated prices highlight the vulnerability of global LNG markets to geopolitical events, underscoring the importance of diversifying supply routes and increasing export infrastructure. Looking ahead, the LNG market faces continued uncertainty as the Strait of Hormuz remains closed, with global buyers adapting to constrained supplies and shifting trade patterns. The US is expected to play a growing role in filling the supply gap, but infrastructure limitations and high utilisation rates may temper the scale of its contribution. Market participants will be closely monitoring developments in the region and the pace of new export capacity coming online to assess the medium-term impact on global LNG prices and energy security.