The Strait of Hormuz continues to face severe restrictions. According to reports from Iranian media cited by Xinhua, Iran's Islamic Revolutionary Guard Corps issued an announcement on March 27 stating that the Strait of Hormuz is now closed to vessels traveling to or from ports of the United States and its Israeli allies. Any attempt to traverse the strait without authorization will face severe countermeasures.

Subsequently, as reported by CCTV News, Aladdin Boroujerdi, a member of the Iranian Parliament's National Security and Foreign Policy Committee, stated on March 30 that, given the current international security situation and external threats, Iran is seriously considering withdrawing from the Treaty on the Non-Proliferation of Nuclear Weapons. The country also plans to implement stricter access and fee systems for ships passing through the Strait of Hormuz.

These developments have intensified concerns over liquefied natural gas (LNG) supplies. The situation became critical after March 18, 2026, when the world's largest LNG production base, Qatar's Ras Laffan Industrial City, was attacked. Combined with the closure of the Strait of Hormuz, these two factors disrupted approximately 20% of global LNG production capacity.

Compounding the problem, on March 27, three major LNG facilities in Australia—accounting for about 8.4% of global LNG trade—were severely damaged by a tropical cyclone. Prior to these events, with navigation through the Strait of Hormuz nearly halted and Qatar's export capacity impaired, Australia had become the world's second-largest LNG exporter.

The year 2026 is poised to be one of significant turbulence for the global LNG market.

Middle Eastern LNG Supply Faces Paralysis On March 18, 2026, Iranian missiles struck Ras Laffan Industrial City in Qatar. Further details of the damage emerged later—Saad al-Kaabi, Qatar's Minister of State for Energy Affairs and President & CEO of QatarEnergy, stated that the Iranian attack incapacitated 17% of Qatar's LNG export capacity. Repairs are expected to suspend 12.8 million tons of annual LNG production for three to five years.

If the blockade of the Strait of Hormuz starting February 28 inflicted a "superficial wound" on global LNG supply, the attack on Qatar's LNG production base represents a severe "internal injury," prolonging the market's recovery timeline.

Futures prices reacted sharply. Following Iran's restrictions on transit through the Strait of Hormuz on February 28, the Dutch TTF natural gas futures price surged by 39.26% in the next trading session on March 2, reaching a high of €49.14 per megawatt-hour. Another peak occurred on March 19, when prices climbed to €74 per MWh, a 35.38% increase. Meanwhile, the Asian LNG benchmark price, JKM, rose more than 80% cumulatively since the conflict in the Middle East escalated in late February.

Late March marked the final window for Asian and European LNG importers to receive shipments from the Persian Gulf. Asia, as the largest LNG consumption region globally, relies on the Middle East for over 80% of its LNG imports. Damage to Qatar's LNG facilities raised concerns in several Asian nations, including Japan.

Citing foreign media reports, sources indicated that on March 27, the Japanese government decided to lift restrictions on coal-fired power generation as an emergency measure in response to Middle East instability. This move aims to address rising uncertainty in LNG imports caused by the conflict. Public data shows that thermal power accounts for nearly 70% of Japan's electricity mix, with LNG contributing over 30% and coal close to 30%.

Pakistan is another Asian country facing severe LNG supply risks. In 2025, approximately 99% of its LNG imports came from Qatar. In late March, Iqbal Ahmed, Chairman and CEO of Pakistan LNG Terminals, acknowledged in a media interview that one of the company's two import terminals would deplete its inventory within days. "After that, we will face a complete supply halt. We do not know when the next cargo will arrive."

A March report from Morgan Stanley titled "Tracking Asian Supply Chain Disruption Risks" highlighted that while market attention focuses on oil price fluctuations, the real "gray rhino" risk lies in physical LNG supply shortages and overlooked disruptions to industrial supply chains originating from the Middle East. The report emphasized that the global LNG market was already in a tight balance, and if key export hubs are blocked, no alternative resources can quickly fill the gap.

Analysts comparing the impact of the current Middle East conflict on global LNG markets with that of the Russia-Ukraine conflict note similarities and differences. One similarity is the comparable scale of supply contraction. However, the pace differs significantly. After the Russia-Ukraine conflict began, Russian pipeline gas flows to Europe did not stop immediately but decreased gradually. In contrast, the U.S.-Iran conflict, combined with the fact that most Qatari LNG exports transit the Strait of Hormuz, could restrict about 20% of global LNG trade almost instantaneously due to shipping disruptions.

Impact on the Chinese Market In mid-March, after an LNG carrier from the Middle East docked in Guangdong, LNG prices in southern China rose rapidly, with some port traders even suspending price quotes.

This episode illustrates the initial impact of Middle East tensions on China's LNG market. Fortunately, supplies from other LNG exporters soon helped alleviate the situation.

Data from China's natural gas information terminal (E-Gas system) on real-time LNG import arrivals showed that over the weeks of March 16–22 and March 23–29, LNG carriers from Malaysia and Australia quickly filled the import gap. However, imports in the latter week declined noticeably—LNG imports for March 23–29 fell by 38% to approximately 620,000 tons.

The system projected that imports for March 30 to April 5 could recover to 820,000 tons, with supplies coming from five source countries.

Undeniably, the Middle East situation has imposed certain shocks on China's LNG market.

The most direct impact is seen in prices. The China LNG Import Price (CLD), published by the Shanghai Petroleum and Natural Gas Exchange—reflecting the price of spot LNG cargoes delivered to Chinese terminals within the next three months—showed that as of March 30, the near-month CLD price reached $18.697 per MMBtu (equivalent to ¥122.354 per gigajoule). This represents an 83% increase from the pre-conflict price of $10.217 per MMBtu (¥66.525/GJ) recorded on February 27.

A representative from the Shanghai exchange explained that after the Middle East conflict erupted, market concerns over shipping disruptions and supply interruptions, combined with expectations of damage to Middle Eastern LNG facilities, triggered panic buying. The conflict also increased vessel insurance premiums and transportation costs, leading Asian buyers to compete aggressively for cargoes to secure supply, thereby amplifying speculative sentiment.

Further analysis indicated that domestically, the LNG market is experiencing intensified supply-demand competition and high price volatility. Influenced by regional market dynamics, Asian spot prices have strengthened, leading to slight increases in ex-terminal LNG prices in coastal areas of China.

Despite short-term disruptions, industry analysts suggest that the Middle East situation may present a window of opportunity for China to reinforce its energy security over the medium to long term.

An expert in international energy trade noted that the Middle East tensions are driving a restructuring of global LNG supply chains and a reassessment of value, creating a dual impact on China's market: short-term pressure but potential long-term benefits for energy security upgrades.

In the short term, damage to Qatari capacity and shipping disruptions in the Strait of Hormuz have affected about one-fifth of global LNG trade. Soaring Asian spot prices have raised procurement and shipping costs for coastal LNG imports in China, increasing cost pressures for sectors like gas utilities and chemicals, and disrupting spot replenishment and long-term contract fulfillment.

In the medium to long term, however, this price reassessment may compel China to accelerate diversification of gas sources, increase efforts to develop pipeline gas from Russia and Central Asia, and expand imports from the United States and Africa. It may also prompt enhancements to gas storage, peak-shaving capacity, and domestic production, thereby strengthening supply chain resilience.

Overall, with domestic gas production and pipeline imports accounting for a high proportion of supply, China's overall supply risk remains manageable. Nevertheless, continued optimization of procurement structures is necessary to mitigate imported cost pressures arising from price fluctuations.