Long Hormuz LNG disruption could keep gas prices high until 2028, OIES says

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BAKU, Azerbaijan, October 20. Prolonged disruptions to liquefied natural gas (LNG) shipments through the Strait of Hormuz could lead to a decline in global LNG imports and keep gas prices high through 2028.

This was stated in a report by the Oxford Institute for Energy Studies (OIES) titled “What Next for Hormuz LNG? Alternative Scenarios.”

According to the report, the potential for increasing LNG supply is limited by high utilization rates of gas liquefaction capacity. Specifically, in the United States in 2026, this figure regularly exceeded design capacity, while utilization rates in other countries also remained high.

“Amid competition with Asian importers for LNG shipments, high prices could lead to a decline in gas demand in Europe and a reduction in injection volumes into underground storage facilities. This could complicate preparations for the 2027/2028 winter season, especially if stockpiling begins from a lower level.

In South Asia, high prices could lead to a reduction in gas imports, as gas will become too expensive for a number of countries. At the same time, importers in North Asia are largely shielded from the effects of reduced supplies thanks to their ability to purchase LNG at higher prices.

The duration of disruptions and the timing of their occurrence may be more significant for the market than the initial scale of the supply reduction. In particular, the situation in Europe will depend on gas inventory management policies and the timeline for replenishing those inventories.

Furthermore, the ability of price-sensitive emerging markets to switch to other fuels or reduce gas consumption will determine how effectively the global market can mitigate the impact of the disruptions,” the report states.

As noted in the study, the market implications will depend on the duration of the LNG supply disruptions. If they end in a few months, the situation will differ from a scenario involving a prolonged supply disruption.

“Although prices may spike sharply in the initial stage in both cases, only protracted disruptions are likely to keep them at high levels through 2028,” the report states.