Iran conflict pulls LNG cargoes east as Americas line up 74m tonnes of new capacity
Asian buyers are diverting Atlantic supply after Qatar disruptions widened the JKM-TTF gap, and North American projects are racing to fill the deficit.
A Nigerian LNG cargo bound for Europe has instead sailed to Asia, traders said, after a surge in Asian gas prices opened a lucrative arbitrage for the seller.5 The diversion, reported in mid-May (2026-05-19), is a clean marker of how far the Atlantic-Pacific spread has moved.5
The gap widened once the Iran war damaged Qatar's export infrastructure and disrupted shipping through the Strait of Hormuz, the world's most important oil chokepoint, which carried 21 million barrels a day in 2022.4,6 Qatari LNG has no pipeline bypass around that strait.4
Asia has the most to lose. EIA estimated that 82% of the crude oil and condensate transiting Hormuz in 2022 went to Asian markets, and the region's LNG buyers now face lost Qatari volumes on top of that.4 Go Katayama, a principal insight analyst at Kpler, said the vessel's diversion reflects the widening arbitrage between the Atlantic and Pacific.5 Qasim Afghan of Spark Commodities said front-month arbitrage opportunities have "increased significantly," now favouring Asian buyers.5
Before the conflict, analysts expected LNG supply to grow strongly this year.6 Instead, damaged capacity and the Hormuz risk premium have tightened the market, and analysts now expect prices to stay elevated for several years.6 A leader at Swiss energy firm Met Group said on Thursday (2026-05-21) the war has delayed a previously anticipated period of LNG oversupply, though supply may still outstrip demand over the coming years.3
North America is moving to fill the gap. The Americas could approve final investment decisions for 12 more LNG export projects this year, totalling 74 million tonnes a year of capacity, spurred by the Qatari disruptions, the Energy Industries Council said in May (2026-05-21).2 Much of that capacity sits on the US Gulf Coast and Mexico's Pacific coast, giving Asian buyers a route that avoids Hormuz entirely.2
The feedstock is already there. Marketed natural gas production in the Lower 48 averaged 117.2 Bcf/d in the first quarter of 2026, up 4% year on year, EIA data show.1 The agency forecasts full-year output up 3% on 2025, led by the Permian at 29.2 Bcf/d, 6% higher than last year.1
But the path from wellhead to ship is not clear. EIA expects Permian production to grow 10% next year only once pipeline constraints ease later this year.1 Haynesville output is forecast up 6% this year and 8% the following year, and new export terminals will absorb much of that incremental gas.1
Prices tell the story of the pull east. JKM spot LNG at $16.52/MMBtu sits well above TTF at €48.80/MWh, the spread that has drawn cargoes toward Asia.5 ICE Brent crude front-month, at $75.22 a barrel, carries a smaller Iran premium, cushioned by an escape valve that gas markets cannot tap.4
Saudi Aramco operates a 5-million-b/d East-West crude pipeline that it briefly expanded to 7 million b/d in 2019, and the UAE links its fields to Fujairah with a 1.5-million-b/d line.4 EIA estimates roughly 3.5 million b/d of effective unused bypass capacity could skirt the strait in a disruption.4 That relief applies to oil, and there is no equivalent workaround for Qatari LNG.4
The near-term question for gas is how many more Atlantic cargoes head east.5 As long as the JKM premium over TTF holds near current levels, the pull on European-bound supply persists, thinning the cushion available for winter restocking.5 Asian buyers, for now, set the price.5