Duration of Strait of Hormuz crisis 'critical' for global gas market: IGU

The duration of the current disruption to LNG supply via the Strait of Hormuz will be "critical" to the global gas market, the International Gas Union said in its latest annual gas pricing survey published May 20.

In the closely watched report, the IGU said the curtailment of Qatari and UAE LNG capacity due to the Strait of Hormuz crisis had "dramatically" altered the outlook for global balances.

"The duration of this crisis is critical," the IGU said.

"If a realistic political agreement can be reached between the warring parties, then the process of recovery will begin at pace," it said. "On the other hand, in the event of a protracted disruption, a

return to the supply growth model looks more difficult."

The IGU said an expansion of global LNG production capacity had been set to ramp up in 2026, marking the first year of major project additions set to run through the end of the decade and into the early 2030s.

The incremental supply was intended to meet a projected growth in demand in China, ASEAN countries and South Asia, as well as increased demand for LNG as a bunker fuel, it said.

"The new supply was also projected to meet LNG demand growth in Europe, as production and pipeline imports decline," it said.

With the reduction in Middle East supply, the other main factor that could help markets find a new equilibrium is softer demand seen in some markets, it said.

The IGU noted, however, that the price shock from the current crisis was less than after the Russian invasion of Ukraine.

"The more limited price response in this crisis, despite the larger net loss of global gas supply from the shutdown of Gulf LNG, is notable," it said.

"Reduced infrastructure congestion in Northwest Europe, and a stronger expected LNG supply outlook (pre-Hormuz closure) may have helped to contain this latest surge in gas prices."

Spot LNG prices remain relatively high, although lower than the record levels seen in 2022.

The Platts JKM -- the benchmark price reflecting LNG delivered to Northeast Asia -- reached an all-time high of $84.76/MMBtu on March 7, 2022.

It hit a recent peak of $25.41/MMBtu on March 19, up from $10.70/MMBtu on Feb. 27, the day before the US and Israel began their attacks on Iran.

Platts, part of S&P Global Energy, assessed the JKM on May 20 at $19.86/MMBtu.

Gas-on-gas pricing

The IGU said that over the next few years, it would be possible to anticipate further shifts toward gas-on-gas pricing and away from oil indexation in the LNG market.

This, it said, was mainly because of the expected large increase in LNG exports from North America.

"Outside the LNG market, further expansion of gas-on-gas pricing would require moves toward liberalization in key markets which, in the current environment, may seem unlikely," it said.

"The transition from regulated to market pricing may be more difficult in a hard core of regulated markets in the Former Soviet Union, the Middle East and North Africa, which have access

to abundant domestic supplies of gas," it said.

The share of gas-on-gas pricing in global gas consumption remained below 50% in 2025, while edging up slightly year over year.

Gas-on-gas pricing accounted for 49.9% of global consumption last year, up from 49.1% in 2024, the IGU said.

Oil indexation covered 18.2% of consumption last year, down from 18.3% the year before.

Most of the remaining global consumption was covered by regulated gas pricing mechanisms.

The IGU -- which has carried out its closely watched wholesale pricing survey since 2005 -- said gas-on-gas pricing had almost completely replaced oil indexation in Europe, except in a few isolated countries in the Balkans plus Turkey.

The majority of oil-indexed pricing is concentrated in the wider Asian markets, the IGU said, but added that gas-on-gas pricing had been gaining ground in the main LNG importing markets and in places where markets have liberalized, such as Brazil.

Total global gas consumption in 2025 was 4.29 trillion cubic meters, up from 4.25 Tcm in 2024, the IGU said.

Of the total, 2.14 Tcm was gas-on-gas priced, while oil-linked gas consumption totaled 782 Bcm.