Middle East Crisis Accelerates US-Thailand LNG Supply Talks as Asian Importers Scramble for Alternatives

Middle East Crisis Accelerates US-Thailand LNG Supply Talks as Asian Importers Scramble for Alternatives Coal shipments to Japan, South Korea and the EU surged 27 percent as Hormuz disruption cuts Asian LNG imports from 12.4 to 5 million tonnes. Coal shipments to South Korea, Japan and the European Union surged 27 percent year-over-year last month, according to BIMCO data, the world's biggest shipowners' association. The Asian importers and the EU are scrambling for alternatives to gas supply from the Middle East, currently trapped behind the Strait of Hormuz or not produced at all following infrastructure damage.³ That coal surge is the backdrop against which the United States and Thailand are accelerating LNG supply negotiations. Thailand, heavily dependent on piped gas from Myanmar and spot LNG from the Middle East, faces the same chokepoint vulnerability that has driven coal reversion across the region. A bilateral US-Thailand LNG deal would diversify Bangkok's supply away from Hormuz-transiting cargoes and lock in volumes from a producer that ships across the Pacific rather than through the Gulf. The Iran war has delayed the expected period of LNG oversupply that was supposed to arrive as new US and Qatari export capacity came online. Instead of a buyer's market, Asian importers face tightness that has pushed Japan and South Korea back toward nuclear restarts and coal burn as interim solutions. The oversupply thesis has not been abandoned — it has been pushed to the right by the duration and severity of the Hormuz closure.² Wood Mackenzie cut its forecast for Asian LNG imports to about 5 million metric tonnes from 12.4 million, assuming a two-month disruption to Middle East supply. That reduction captures the demand destruction and fuel switching already underway. But if the disruption extends beyond two months — and at nearly three months it already has — the actual shortfall is larger than the revised forecast assumed.⁵ E3G, the climate and energy think tank, told Montel that import-dependent economies remain exposed to recurring chokepoint risks even amid abundant global oil and LNG supplies. The warning applies directly to Thailand and other Southeast Asian importers whose gas supply chains run through contested maritime corridors. Chokepoint risk cannot be diversified away through portfolio management alone — it requires physical supply from routes that bypass the bottleneck.¹ Energy security concerns are shifting policy responses across Asian markets, accelerating coal usage and delaying coal plant retirements, Wood Mackenzie analysts said. The policy reversal is pragmatic rather than ideological. Governments that committed to coal phase-outs are discovering that the alternative supply — LNG — is unavailable at any price when the shipping route is blocked.³ LNG prices soared on Middle East supply fears as the conflict restricted Hormuz transit. The price spike makes long-term US LNG contracts more attractive to Thai buyers than they were six months ago, when spot markets offered flexibility at lower cost. The Iran war has inverted the economics of term versus spot procurement — locked-in volumes from a non-Hormuz supplier now carry a security premium that justifies the inflexibility.⁴ For LNG traders, the US-Thailand talks are one node in a broader renegotiation of Asian supply chains away from Middle Eastern dependence. Every bilateral deal that redirects US cargoes to Asia tightens the Atlantic Basin supply available for European storage injection. The pace of these bilateral announcements through the summer will determine whether Europe's 76 percent storage target becomes harder or easier to achieve. The next signal is whether Thailand signs a binding term contract with a US exporter or whether talks remain at the memorandum-of-understanding stage. Term commitments redirect physical molecules; MOUs redirect headlines.