How much global LNG capacity relies on the Strait of Hormuz?

Over 80 million tonnes per annum of LNG, accounting for approximately 20% of total global supply, must transit the Strait of Hormuz to reach international markets. The vast majority of these exports originate from Qatar, with additional volumes from the United Arab Emirates.

Can bypass pipelines compensate for a maritime closure of the strait?

No, bypass infrastructure is inadequate to handle the full volume of stranded hydrocarbons. While Saudi Arabia and the UAE operate pipelines to the Red Sea and Gulf of Oman, their combined spare capacity is limited to several million barrels of oil per day, and no LNG bypass infrastructure exists.

How would an LNG supply shock through Hormuz affect Europe?

Europe would face extreme price competition against Asian buyers for non-Gulf LNG cargoes, particularly from the United States and West Africa. This would drive regional gas benchmarks significantly higher, reversing recent stabilization in European wholesale power and fuel markets.

Offshore Energy · May 27, 2026 (May 27) · 1 min read

Strait of Hormuz closure: Tight LNG markets, oil prices could soar to $200

Analysis

AI-assisted analysis · reviewed by Yuri Kan

An analytical assessment by energy consultancy Wood Mackenzie highlights that a potential closure of the Strait of Hormuz could trigger unprecedented turmoil in global energy markets. The disruption would isolate over 80 million tonnes per annum of liquefied natural gas alongside substantial crude flows, potentially driving oil prices to $200 per barrel. Such an event would represent the most severe supply shock in modern history, outstripping past geopolitical crises in both scale and market impact.

Key Facts

A disruption in the Strait of Hormuz would strand over 80 million tonnes per annum (mtpa) of LNG, representing roughly 20% of global supply.
Energy consultancy Wood Mackenzie warns that a full closure could drive global crude oil prices up to $200 per barrel.
The primary LNG volumes at risk originate from Qatar and the United Arab Emirates, which depend entirely on this maritime passage for export.
Roughly 20 million barrels per day of petroleum liquids, approximately a fifth of global petroleum consumption, transit through the chokepoint.
Spare pipeline export capacity bypassing the strait—via Saudi Arabia's East-West pipeline and the UAE's Habshan-Fujairah line—is insufficient to absorb the stranded volumes.

Background & Context

The Strait of Hormuz is the world's most critical maritime energy chokepoint, connecting Persian Gulf petroleum producers to international consumers in Asia, Europe, and beyond. Escalating regional geopolitical tensions involving Iran and maritime security threats have repeatedly raised concerns regarding the physical security of this narrow waterway. While producers like Saudi Arabia and the UAE have constructed overland bypass pipelines over the past decades, the vast majority of regional crude and virtually all Qatari LNG exports remain entirely reliant on open navigation through the passage.

Market Impact

A sustained blockade would instantly destabilize the global energy balance, forcing Asian and European buyers into severe competition for alternative Atlantic and Pacific LNG cargoes. The resulting price spike would trigger global inflationary pressures, demand destruction, and potential government-mandated rationing in import-dependent economies. Alternative suppliers, including US LNG exporters and non-Gulf oil producers, would face maximum utilization, but the absolute volume deficit could not be mitigated in the short to medium term.

What to Watch

Market participants will closely monitor naval security deployments and diplomatic de-escalation efforts in the Persian Gulf to gauge shipping risk premiums. Analysts will also track war risk insurance rates for commercial tankers, which serve as an early indicator of operational disruption before physical flows are halted.

Why This Matters for Cyprus

A severe disruption in Middle Eastern LNG flows would drastically increase the strategic value of Eastern Mediterranean gas reserves, accelerating interest in upstream development across Cyprus's offshore acreage and the wider Levantine basin. High global gas benchmarks would also incentivize faster commercialization of discoveries such as Cronos and Aphrodite to supply domestic and regional Mediterranean energy needs.

Frequently Asked Questions

How much global LNG capacity relies on the Strait of Hormuz?: Over 80 million tonnes per annum of LNG, accounting for approximately 20% of total global supply, must transit the Strait of Hormuz to reach international markets. The vast majority of these exports originate from Qatar, with additional volumes from the United Arab Emirates.
Can bypass pipelines compensate for a maritime closure of the strait?: No, bypass infrastructure is inadequate to handle the full volume of stranded hydrocarbons. While Saudi Arabia and the UAE operate pipelines to the Red Sea and Gulf of Oman, their combined spare capacity is limited to several million barrels of oil per day, and no LNG bypass infrastructure exists.
How would an LNG supply shock through Hormuz affect Europe?: Europe would face extreme price competition against Asian buyers for non-Gulf LNG cargoes, particularly from the United States and West Africa. This would drive regional gas benchmarks significantly higher, reversing recent stabilization in European wholesale power and fuel markets.

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