Hormuz Disruption Adds $39 Billion to Global LNG Bill

Global LNG importers will spend at least $39 billion more on cargoes in 2026 while receiving 60.7 million tonnes less, according to Rystad Energy modeling that assumes Qatari and UAE deliveries stay shut out of the market from March through year-end. The Oslo-based consultancy puts total portfolio costs at $256.3 billion, up 18% from a pre-war estimate of $217.8 billion. That is the arithmetic of the Strait of Hormuz disruption, and it lands hardest on Europe.

Buyers losing Qatari and UAE volumes are replacing them on the spot market at higher prices. Importers' exposure varies widely depending on contract coverage, pricing benchmarks and their ability to cut demand. Rystad's numbers are scenario output, not observed trade. Still, the direction of the exposure gap between regions is already visible in pricing.

What happens to Europe's bill?

Europe faces the largest increase in absolute terms: at least $12 billion, or 18%, on its LNG bill — even as demand falls by 24 million tonnes. The region entered the crisis already heavy on spot purchases, so it has little room to shift further. Its share of spot imports is projected to rise just 5.49% from pre-war estimates, after demand destruction is factored in.

The volume loss is concrete. Europe is set to lose 20.6 million tonnes of the 24.7 million tonnes of Qatari LNG scheduled for 2026 delivery before the conflict began. Roughly 65% of Europe's LNG is bought on the spot market, and about a quarter of its long-term contracts are tied to gas price indexes. The average price Europe pays is up 47%.

Takeaway: Europe relied on spot liquidity to cover its residual gas demand, and that reliance is now costing it billions.

Why does East Asia fare better?

East Asia has the largest nominal exposure to Gulf contracts but the smallest relative cost increase outside the Middle East, at 9.7%. Spot purchases account for just 14.5% of its imports. A broader portfolio of contracts outside the Middle East and lower LNG demand limit the damage.

Pricing terms drive the divergence. Rystad's research shows 82% of East Asia's long-term LNG contracts are linked to oil, a price that has risen far less than spot LNG. Those oil-linked contracts are up about 28%, versus 72% for contracts tied to hub and spot benchmarks.

South Asia is adjusting mainly through lower imports, with Pakistan cutting purchases more sharply than India. Egypt and Brazil are driving the rise in prices and import volumes in Africa and South America, respectively. The Middle East itself is adjusting through demand destruction.

Takeaway: oil indexation, whatever its past drawbacks, is currently East Asia's shield.

What does the analyst actually say?

Christoph Halser, senior analyst in gas and LNG research at Rystad Energy, frames the core lesson: "This conflict has affected every player in the gas market to some degree, but not every economy is equally equipped to absorb the shock."

He adds that the crisis "exposes a fundamental weakness in gas security: diversifying pricing benchmarks can help manage costs, but it does not guarantee physical supply." Importers, he argues, need to assess exposure to supply disruptions alongside price risk, building contract portfolios around reliable delivery routes and demand that cannot easily be replaced. His closing point: "when cargoes can disappear overnight, the resilience of supply matters as much as the price paid for it."

Do route choices and US contracts fix it?

Rystad's geostrategic analysis points to the value of what it calls 'unchokeable' supply — deliveries that avoid maritime chokepoints or disputed waters. US Gulf Coast cargoes to Europe bypass Hormuz entirely. Deliveries to Asia may hit Panama Canal constraints or require longer voyages, which makes Australian and Canadian Pacific supply the relevant alternatives.

Expanding US liquefaction capacity (plants that chill gas into LNG for shipping) offers importers more Henry Hub-indexed supply and benchmark diversification. But the consultancy flags a caveat importers rarely price in: rising feedgas demand from US terminals, alongside power-sector needs, could support Henry Hub prices even as new global liquefaction capacity eases spot prices in Asia and at the Dutch TTF benchmark (Europe's gas trading hub).

Rystad's advice is blunt. Importers should test whether the current cost advantage of Henry Hub-indexed contracts persists over the full contract term, rather than assuming today's spread endures. Contract tenor and volume flexibility should match residual demand. And portfolio contracts need scrutiny for replacement obligations and sourcing flexibility when contracted cargoes cannot be delivered as planned.

Treating gas as transitional does not remove the need to procure the volumes still being consumed. Deferring term procurement before substitutes exist leaves importers exposed to replacement-cost shocks — a lesson Europe is now paying for at the rate of at least $12 billion a year.

The watch item: whether Qatari and UAE flows through Hormuz actually stay offline through end-2026, the assumption on which the entire $39 billion figure rests.