IEA warns Hormuz shock could leave winter LNG 10 to 25 bcm below last year

Global liquefied natural gas supply could run 10 to 25 bcm below year-earlier levels from November to March, the International Energy Agency said in its Global Gas Security Review 2026¹. The size of any decline depends on how fast Strait of Hormuz transit recovers¹. The report was released on 4 November³, and BusinessLine reported its winter findings on 7 November¹.

EU storage sites are entering the heating season with their lowest inventories since 2013, the review found³. That could leave the region with an unusually thin buffer against a cold snap or an outage³.

"The disruption of LNG flows through the Strait of Hormuz creates unprecedented uncertainty for the global LNG market ahead of the 2026/27 winter," the report said¹.

The size of the hole

Loadings from Qatar and the United Arab Emirates fell by 60 bcm year on year between March and October, the IEA said¹. That cut global LNG output by about 5%, or 20 bcm¹. A separate IEA measure, for delivered volumes from the two countries in January to October, put the fall at around 62 bcm, or 63%⁴.

Replacement supply is arriving, but the IEA says it falls short. It counts about 18 bcm from new projects and 3 bcm from existing plants outside the Persian Gulf this winter, for slightly over 20 bcm¹. "Despite the strong growth, this extra supply would remain insufficient to compensate for the lost volumes from Qatar and the United Arab Emirates," the report said¹.

Pipelines cannot close the gap. Long-distance lines generally run close to their designed capacity, which limits how far they can offset an LNG shortfall¹.

New trains arrive slowly

North American exporters are expected to drive the growth, with the United States, Canada and Mexico expanding, and smaller additions from West Africa and Australia¹. Venture Global's Plaquemines plant in Louisiana completed commissioning at its first phase and moved to commercial operations at the start of November, with Shell taking the first cargo under a long-term contract⁵.

Ramps take time. The IEA flags unplanned outages and delays in lifting new liquefaction plants to full rates as downside risks to supply¹. Wood Mackenzie expects Europe to keep pulling marginal cargoes through 2027, which supports prices further along the curve⁶.

Two scenarios, one hinge

The IEA's range depends on how fast Hormuz transit recovers. If the strait starts to reopen progressively in January 2027, global LNG supply would fall by around 9 bcm, or 3%, year on year over the winter¹. If it stays closed to the end of March 2027, the decline would be around 20 bcm, or 7%¹.

Transit was still severely restricted in late October¹, and prices have moved with each turn in diplomacy. TTF front-month rose 4% to EUR98.60 per MWh on 3 November after US strikes on Iran's Qeshm Island⁷. UK gas fell more than 18% in the week to 5 November on hopes of a deal⁸.

What it costs

Benchmarks sit near four-year highs. The Japan-Korea Marker stood around $32 per MMBtu at the start of November, near a 46-month high⁵. Platts assessed JKM for December at $30.761 per MMBtu on 22 October⁹.

Banks expect more. Citi puts winter 2026-27 TTF at up to EUR85 per MWh if the conflict escalates but LNG plants stay intact. It sees around EUR154 per MWh if liquefaction facilities are hit². Weighting the two, Citi estimates about EUR103 per MWh. The prevailing price was around EUR95 per MWh at the time of its analysis. Without escalation, Citi sees EUR60 to EUR70 per MWh². Goldman Sachs raised its first-quarter 2027 TTF forecast to EUR74 per MWh from EUR44⁷.

The cost is already visible in consumer prices. Eurostat's flash estimate put euro area energy inflation at 20.8% in October, the highest component of the 4.0% annual rate¹⁰.

Who absorbs it

Europe's industry has done part of the adjusting by using less gas. Fuel switching has cut European industrial gas demand by almost 20% since 2022, and Wood Mackenzie says further large reductions would only come at the cost of a recession⁶. The IEA expects global gas demand to fall by around 1.5%, or close to 65 bcm, in 2026. It cites demand destruction in the Middle East, lower industrial use in Europe and gas-to-coal switching in Asia³.

In Asia, buyers with fewer switching options have paid up. Taiwan, Bangladesh and Thailand have kept buying premium cargoes for power generation and fertiliser production, according to Wood Mackenzie⁶. Asian and European buyers are chasing the same cargoes, and Europe's weak storage adds to that competition⁹. The EU is also set to ban all imports of Russian LNG from 1 January 2027, though some long-term contracts may divert shipments outside the EU until at least late July 2027⁹.

What to watch

• Hormuz transit volumes. The IEA's scenarios turn on a January reopening versus a closure to the end of March¹.
• EU storage against its seasonal range. Inventories were 74.58% full on 21 October, according to Gas Infrastructure Europe data⁹, and Wood Mackenzie expects them to end the winter only 17% full in a normal-weather case⁶.
• TTF and JKM prints, which have swung with each turn in the talks⁷. JKM for December was assessed at $30.761 per MMBtu on 22 October⁹.
• Delays at new liquefaction trains. The IEA lists ramp-up delays and outages as risks to its supply estimate¹.