- The West Asian war disrupted LNG supply through the Strait of Hormuz, affecting global trade
- Europe shifted gas supply away from Russia, increasing LNG imports from the US and Norway
- Europe faces challenges with LNG storage and must compete globally, especially with Asia
The West Asian war disrupted a critical part of the global liquefied natural gas (LNG) trade. Qatar and the UAE send LNG through the Strait of Hormuz, a route that normally carries almost one-fifth of global LNG supply. More than 80% of those volumes go to Asia, with China, India and South Korea accounting for more than half.
As Gulf supplies came under pressure, Europe and Asia found themselves competing for the same LNG cargoes. Asia has long depended on LNG from the region. Europe's dependence rose sharply after cutting its reliance on Russian gas. Let's understand the dynamics.
Europe's Suppliers Have Shifted
Look at how Europe's gas supply changed after the Russia-Ukraine war.
In 2021, Russia supplied around 45% of the EU's gas imports, mostly through pipelines. Norway supplied about 24%, while the US accounted for just 6%, mostly through LNG. That has changed now.
As Europe cut its dependence on Russian gas, Norway became the backbone of replacement pipeline supply, while the US expanded LNG shipments. By 2026, Norway supplied slightly less than one-third of total EU gas imports and the US about a quarter, while Russia's share had fallen to roughly 13%. LNG's share of total imports had risen to 45%, up from 20% in 2021.
This shift in suppliers has impacted the price mechanism too.
Before the war, Europe relied heavily - as high as 80% of imports - on long-term contracts and predictable pipeline flows. It guaranteed stable prices. Now, almost half of its imports are based on spot prices. So, it needs to be more careful before buying.
The Russian Replacement
But Europe's transition away from Russian gas is not over. Russian LNG must be phased out by the end of 2026, with the remaining pipeline imports ending during 2027.
Europe has pursued two broad strategies.
The first is to reduce how much gas it needs. More renewable power, greater electrification and better energy efficiency can all reduce gas consumption.
The second is to find different suppliers and different routes. Gas from Azerbaijan is flowing through the Southern Gas Corridor; new interconnectors are helping move non-Russian gas across Europe, and Germany has rapidly built LNG import capacity.
Western Europe has largely moved away from Russian pipeline gas, but not Central and Eastern Europe. The region has added LNG terminals, particularly around the Mediterranean, but bringing a ship full of LNG to Europe is only the first step. It needs to be transported through pipelines to the countries that need it. That is still less developed in those parts.
There is another complication. Europe cannot simply keep reducing gas consumption indefinitely.
The European Court of Auditors has pointed out that part of the decline in European gas use came from mild weather and high prices forcing consumers and industries to cut back. A chemical plant that shuts down production because gas is too expensive is not how the European economy wants to solve this problem.
Europe's Storage Problem
That brings us to prices.
Europe normally buys more gas during the summer, when demand is relatively low, and stores it underground. It then withdraws that gas during winter, when heating demand rises. Usually, summer prices are lower than winter, which makes this mechanism cost-effective. However, last year, it saw an unusual scenario. Prices in summer were higher than in the following winter.
It still managed to enter the winter with storage around 83% full. But by the end of March 2026, it had fallen below 30%, close to a nine-year low. Had it been a normal year, it would have been easy to fill the tanks before winter arrived this year.
But this year, the war in West Asia changed the calculations. After the war, European and Asian buyers entered the same global pool of available LNG. Suddenly, Europe's storage problem became a global LNG competition - and therefore a global price problem.
Asia's Demand Shift May Help Europe
In a crisis, buyers become willing to pay almost any price. Asian countries bid aggressively for replacement as supplies from Qatar stalled. The International Energy Agency (IEA) found that Asia's LNG price benchmark traded at a premium above Europe's after the disruption. As a result, flexible LNG cargoes became more profitable to send to Asia than to Europe.
But high prices eventually change behaviour. They started cutting their imports.
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Recent Kpler data show that some Asian buyers are stepping back from the spot market. Experts estimate that Asian LNG imports in September could fall to their lowest level for the month in eight years. As demand weakens, Europe is attracting cargoes from Asia. That's something similar to 2022.
European LNG imports rose more than 60% in 2022 as buyers pulled cargoes away from other markets. Asian LNG imports fell that year as high prices forced some consumers to reduce demand or switch to alternative fuels. The same dynamic is repeating today. Europe's need to refill storage is drawing LNG towards Europe, while high prices are beginning to push some Asian buyers out of the market.
Final Take
The IEA now estimates that the Middle East conflict could remove around 140 billion cubic metres (bcm) of LNG supply cumulatively between 2026 and 2030, equivalent to roughly 15% of the new LNG supply expected over that period. The result could be tighter gas markets for longer, with the effects of the disruption continuing to be felt through 2026 and 2027.
For Europe, the bigger lesson is how deeply its gas market is now connected to Asia. Europe can diversify away from Russian gas, build LNG terminals and find new suppliers, but it still has to compete with Asian buyers for the same cargoes. A change in Asian demand can therefore change Europe's gas prices and supply conditions.
Finally, repeated episodes of high and volatile gas prices could encourage countries to invest more heavily in renewables, energy efficiency, storage and, in some markets, nuclear power.
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