Asia and Europe to battle over dwindling LNG cargoes

Asian and European energy buyers are competing to secure increasingly scarce LNG cargoes after conflict in the Middle East disrupted shipments through the Strait of Hormuz, the Financial Times reported on March 12.

The disruption has tightened global gas markets just months after a period of relative oversupply. Last year, there was a global gas supply glut. This year that will dramatically flip and there will be a global shortage. Buyers are already scrambling to secure alternative shipments and the price for gas is already higher in Asia than it is in Europe, where it has doubled in just the last week.

Ship-tracking data analysed by the Financial Times shows that several LNG carriers originally bound for Europe have abruptly changed course and headed towards Asian destinations, highlighting the intensifying competition between the two regions for flexible cargoes.

LNG carriers leaving US Gulf export terminals, including Sabine Pass, Corpus Christi, and Freeport, initially sailed towards European regasification terminals, but some have reportedly altered course in the Atlantic, turning south of the Azores or near Gibraltar and heading through the Suez Canal or around the Cape of Good Hope toward Asian markets in just the last few days.

Countries including Taiwan, South Korea and Japan are seeking additional shipments to compensate for supply they expected from the Gulf. Taiwan relied on Qatar for more than 30% of its gas consumption in 2025, according to Citigroup, while South Korea and Japan sourced roughly 15% and 5% of their gas respectively from the Gulf producer.

Demand pressures are particularly acute in Asia during the summer months when electricity consumption rises due to air-conditioning use. Although most LNG is sold through long-term contracts, buyers can sometimes redirect cargoes, and sellers may divert shipments if market prices rise sufficiently.

European and Asian gas benchmarks have surged since the escalation of hostilities involving Iran. European benchmark prices reached €69.50 per megawatt hour earlier this week, more than double levels seen before the conflict, though still well below the €342/MWh peak reached during the energy crisis of 2022.

In Asia, the JKM benchmark price for LNG more than doubled to $24.80 per 1mn British thermal units, equivalent to about €73.10/MWh.

Europe is better prepared to cope with the growing gas crisis this time. During the 2022 shock it was heavily dependent on Russian supplies that were suddenly halted. Since then it has replaced it with US LNG, but created a new dependency on American LNG in the process. Also renewable generation capacity has been massively expanded since 2022.

In 2025, the EU imported almost 38bcm of natural gas from Russia, 12% of total EU gas imports. These imports from Russia consisted of 20bcm of LNG and 18bcm of pipeline flows via TurkStream. Europe’s main vulnerability is not from the lack of physical supplies, but costs. With 110bcm per year of Persian Gulf impacted currently, prices are expected to continue rising, but analysts don’t expect them to reach the record €347MWh peak of the 2022 crisis.

Despite a commitment to reduce its dependence and ban imports of Russian gas completely, Europe remains hooked on Russian gas.

Just nine months before its due to cut off supplies completely, EU buyers purchased every cargo from Russia’s Yamal LNG project in February, G Captain reports. In February 2026, the European Union imported 1.54mn tonnes of LNG from Russia’s Yamal LNG facility, delivered across 21 cargoes – marking the first time since April 2018 that every shipment was destined for European ports. This follows an already high January purchase, when EU buyers took 93% of Yamal’s production. 

The Iran war has also sent shipping costs have also risen sharply, complicating trading decisions over where to deliver cargoes. According to Spark Commodities, higher European prices and soaring shipping rates have recently reduced the incentive to divert US cargoes to Asia.

In response to previous market disruptions, buyers have begun inserting stricter clauses into contracts. According to the Financial Times, “buyers had started putting clauses in contracts to say that suppliers would face much higher penalties if they diverted cargoes for commercial gain.”

Contract structures also shape how flexible LNG flows can be. While producers such as Qatar typically impose strict destination clauses limiting where shipments can be delivered, US exports are largely free of such restrictions, allowing buyers to redirect cargoes to the most profitable markets.

Several analysts said producers and traders were increasingly willing to break contracts if market conditions made it financially attractive to do so, underscoring the intense pressure in global gas markets as geopolitical tensions reshape energy trade flows.