The Middle East conflict has upended global LNG fundamentals, wiping out a significant share of Qatari output and triggering a prolonged reassessment of gas balances across Asia and Europe, Rystad Energy strategists said in a report Monday.
Rystad analysts said March marked the end of a 12-month streak of year-over-year LNG production growth, as strikes on key infrastructure in Qatar curtailed an estimated 17% of the country's liquefaction capacity for three to five years.
Though rising output from the US and other producers limited month-over-month global losses to under 2 million tons, the analysts said the longer-term impact is far more severe.
Rystad now projects total supply losses of 32-40 million tons in 2026, with downside risk up to 68 million tons, if disruptions in the Strait of Hormuz persist or worsen.
A limited restart of Qatari operations in mid-April has done little to shift the broader outlook, given the scale of infrastructure damage and uncertainty over maritime flows through Hormuz.
Asia has borne the immediate brunt of the disruption, Rystad analysts said. With about 83% of interrupted cargoes traditionally flowing to the region, import-dependent economies have been forced to make rapid demand adjustments.
South Asia saw LNG imports fall 18% y-o-y amid price sensitivity and substitution effects, while even affluent East Asian buyers cut imports by about 15%, a sharper-than-expected 2.5 million ton decline.
Rystad said the squeeze has rippled through fuel markets, with coal burn rising again in the Pacific Basin and lifting regional prices by 45% y-on-y as governments and utilities seek cheaper alternatives.
China has not been immune. Supported by a robust domestic supply, the country's LNG import forecast for 2026 has been revised down to 70.6 million tons, reflecting both weaker marginal demand and structural shifts in procurement strategy.
Europe, in contrast, has so far avoided visible stress beyond elevated benchmark prices at the Title Transfer Facility.
LNG imports were broadly flat month-over-month and year-over-year, helped by resilient US flows and mild weather that has curbed gas burn, while supporting modest storage injections alongside strong renewable generation.
However, Rystad said that Europe's apparent stability may be temporary. The consultancy said competition for US cargoes is likely to intensify as Middle Eastern supply remains constrained, while pipeline capacity constraints limit Europe's ability to substitute for alternative flows.
"Stable March supply could lull the continent into a false sense of security," the report said, adding that Europe may ultimately face a choice between lower storage heading into winter or reduced gas consumption.
Rystad projected that the Middle East conflict is set to reshape LNG markets through 2030, with structural losses from damaged Qatari facilities and delays to major projects, including Qatar's North Field Expansion and the Ruwais LNG project, tightening global supply.
Higher prices in Europe and Asia are expected, while elevated oil prices could put downward pressure on US Henry Hub benchmarks.