The blockade of the Strait of Hormuz, triggered by the Iran conflict, is reshaping the long-term landscape of the global liquefied natural gas market in an unexpected manner.

The closure has cut approximately 20% of global LNG supply, causing the Asian benchmark price JKM to surge to around $30 per million British thermal units in March, a sharp increase from under $11 in February. However, analysts note that unless peace talks between Washington and Tehran break down and the blockade persists beyond July, LNG prices are expected to decline again and remain low for an extended period.

The more profound impact lies in structural shifts on both the supply and demand sides. This crisis is prompting Asian buyers to fund LNG projects in North America, Africa, and Latin America on a large scale, while simultaneously accelerating a partial shift in demand towards solar power and coal. Data shows that last year, the global LNG industry approved a record volume of new capacity. Multiple factors are converging to accelerate the formation of a buyer's market.

**Short-term Price Shock May Be Less Severe**

While the impact of the Iran conflict on the LNG market is significant, its intensity is far less than that of the Russia-Ukraine conflict in 2022. The JKM benchmark price briefly touched around $30 per MMBtu in March this year, whereas in 2022, the price jumped approximately eightfold, nearing $70.

The world's largest LNG plant is currently offline, with repair work estimated to take at least three years. Meanwhile, the Strait of Hormuz blockade has directly severed about 20% of global LNG supply, severely impacting price-sensitive importers like India, Bangladesh, and Pakistan.

Currently, European importers are seizing this opportunity to accelerate inventory replenishment for the 2026-2027 winter heating season. Various parties are also adding to safety stocks in response to potentially escalating Gulf tensions, which will provide some short-term price support. However, analysts believe this is merely a final buffer period before the arrival of a buyer's market.

**"Beyond Hormuz, All Projects Will Proceed"**

The blockade of the Strait of Hormuz has fundamentally altered Asian policymakers' assessment of energy security. Analysts suggest no rational Asian decision-maker will continue to view this waterway as a reliable route, making reducing dependence on Qatar and the UAE a strategic priority.

The market outcome of this logic can be succinctly summarized: all LNG projects located outside the Strait of Hormuz will secure construction opportunities. Projects that seemed unviable just 90 days ago are now poised to receive funding from Asian buyers. Consequently, LNG export projects in North America, Africa, and Latin America are set to experience a construction boom.

Simultaneously, Qatar will leverage its low-cost advantage to seek buyers and pursue expansion, although its expansion timeline may be delayed by 6 to 18 months. Analysts indicate that regardless of the delay, the impact on the market structure around 2030 will be relatively limited.

**The Third Wave of Supply: Larger and More Prolonged**

Historically, the global LNG market's absorption cycle for successive supply expansion waves typically lasts two to three years. During the first wave from 2009 to 2011, the completion of several Qatari projects increased global supply by about 40%. The second wave from 2016 to 2019, driven by the US shale revolution, led to a significant expansion of LNG export capacity, boosting global supply by roughly 45%, with the European market—especially post-2022 as it was forced to reduce Russian pipeline gas—playing a key absorbing role.

Even before the Iran conflict, the market was already bracing for a third wave of expansion originally expected to last from 2026 to 2030, with the prospect of oversupply beginning to take shape. Now, this wave has not been canceled; instead, it has become larger and potentially longer-lasting due to Asian buyers increasing funding for more projects outside the region, though the overall pace may be delayed by about a year due to the Hormuz blockade.

According to the latest estimates, the global LNG industry approved a record volume of new capacity last year. Data also shows that over 700 billion cubic meters of projects globally are still seeking final investment decisions, with about 110 billion cubic meters located in the US and already having regulatory approval. Global LNG production for 2025 is estimated at around 60 billion cubic meters. Analysts point out that if all these projects proceed, global LNG supply would more than double from current levels.

**Demand Shift: Coal and Solar Emerge as Beneficiaries**

Whether the supply wave can be fully absorbed depends on whether demand can keep pace—and analysts are skeptical, at least at pre-conflict price levels. They argue that LNG has suffered two credibility blows in the past four years: first the Russia-Ukraine conflict, and now the Iran conflict. No serious policymaker is willing to wait for a third shock.

On the demand side, major importers are accelerating diversification towards other energy sources. Options for Asian nations include solar photovoltaic supported by battery storage technology and their abundant coal reserves. Analysts draw a historical analogy to the 1970s: the oil crisis forced industrialized nations to shift massively to coal, with nuclear power being almost the only alternative at the time. Today, Asia can embrace both cheap solar and coal as viable pathways.

Consequently, coal may benefit not only in power generation but also potentially in the chemical and fertilizer sectors through coal-to-chemicals routes, assuming a new role as an "energy security commodity." This poses a significant constraint on the long-term growth prospects for LNG demand.

Beyond these known variables, there exists a potential factor that could further exacerbate oversupply—the eventual end of the Russia-Ukraine conflict, which would see more Russian natural gas re-enter the global market, adding another layer of pressure to an already loosening LNG supply-demand balance.

Analysts conclude with an old commodity market adage: today's high prices sow the seeds of tomorrow's low prices. History has repeatedly shown that the LNG market can switch from shortage to surplus with surprising speed.