Hormuz Outage Puts 41.7 Bcm Burden on LNG Demand Through 2027

Around 80% of Qatar and UAE liquefied natural gas exports remain sidelined by the Strait of Hormuz disruption, and the arithmetic does not favour a supply-side fix. An October analysis by the Oxford Institute for Energy Studies (OIES) concludes that demand destruction, not new production, will close the gap if the outage drags into 2027.

The numbers are stark. Combined Qatari and Emirati LNG exports averaged 1.73 billion cu m/month between March and September, against a five-year pre-crisis average of 9.37 bcm/month. Renewed attacks on commercial shipping have complicated any sustained recovery in shipments. Europe enters winter with EU underground storage at 74.6% of capacity as of Oct. 18, well below the five-year seasonal average of about 89%. Dutch TTF futures traded near €88/MWh, roughly $29/MMbtu, on Oct. 19. German storage sits at about 61%.

The takeaway: the market is short, and it knows it.

How big is the gap?

OIES models an April 2027 restart of Gulf exports as its baseline. Delaying that recovery to October 2027 would create a 49-bcm supply gap in 2027 relative to the baseline, with other exporters providing only 7.3 bcm of additional supply. The remaining 41.7 bcm — 85% of the shortfall — falls on lower imports and reduced demand.

That is a demand-side adjustment wearing a supply-costume. No liquefaction complex outside the Gulf can conjure 42 bcm on that timeline.

Can US exports fill the hole?

Not really. US liquefaction plants already run at high utilization, supported by a wide spread between Henry Hub, near $3/MMbtu on Oct. 20, and European prices above $29/MMbtu equivalent. EIA data showed working gas inventories at 3.57 tcf for the week ended Oct. 9, after a 67-bcf injection — a 1.3% surplus to the five-year average, narrowed from 2% the prior week. LNG feedgas deliveries averaged about 18 bcfd in September, up 4.4% from August, per American Gas Association data citing Rystad Energy.

Yet OIES modeling suggests US exports would change little across its 2027 Hormuz scenarios, despite new capacity additions. Australia would supply most of the incremental response. Spare capacity, like spare change, only helps if you have it.

Who absorbs the cuts?

Under the October 2027 restart scenario, European LNG imports would fall 20.8 bcm against the April baseline — about half the global demand adjustment. China would take 6.6 bcm of cuts, South Asia 5.4 bcm.

The pain distributes unevenly:

• Europe adjusts chiefly through reduced summer storage injections, risking insufficient replenishment before winter 2027–28.
• South Asian buyers face direct cuts, fuel switching to coal or oil, or power shortages.
• Japan, South Korea, and Taiwan stay comparatively insulated, able to bid for higher-priced cargoes.

Europe's adjustment is deferral. South Asia's is rationing. The difference matters for the second winter.

What does the price curve say?

Under the OIES April 2027 baseline, TTF would fall to $16.05/MMbtu in first-quarter 2027 and $12.39/MMbtu in the second as returning Gulf supply is anticipated. A delayed October 2027 restart pushes TTF to a peak of $31.35/MMbtu in second-quarter 2027; restrictions persisting through 2028 produce a similar $32.05/MMbtu peak. A partial recovery to 50% of pre-crisis output from January 2027 yields a milder peak of $18.42/MMbtu in first-quarter 2027.

Current forward prices sit well above the April restart scenario. Traders, in short, do not believe the baseline.

The watch item is the reopening of Hormuz itself. Every quarter of delay adds roughly a quarter of the 49-bcm gap, and every gap lands on importers' balance sheets rather than producers' targets.