Rystad Energy estimates that global liquefied natural gas (LNG) importers will spend at least $39 billion more on contracted and spot supplies in 2026, despite buying 60.7 million tonnes less, as more buyers turn to the spot market to replace volumes disrupted by the ongoing Middle East conflict.
Rystad Energy said on Monday that disruptions to Qatari and UAE exports through the Strait of Hormuz are forcing buyers to secure replacement volume at higher prices.
Total portfolio costs are expected to reach $256 billion, up 18 percent from a pre-war estimate, underscoring how importers face different levels of exposure depending on their contract coverage, pricing benchmarks and ability to reduce demand, according to Rystad Energy.
Rystad Energy’s modeling assumes that Qatari and UAE LNG deliveries will be unavailable from March through the end of 2026.
Under this scenario, global LNG portfolio costs rise from $217.8 billion to at least $256.3 billion.
Europe faces largest increase
Rystad Energy said Europe faces the largest increase, with its LNG bill rising by a minimum of $12 billion, or 18 percent, even as demand falls by 24 million tonnes.
Europe entered the crisis already heavily reliant on spot purchases, leaving less room to further boost that share further, it said.
As a result, its share of spot imports is projected to rise by just 5.49 percent, after factoring in demand destruction, compared with pre-war estimates.
At the same time, Europe is set to lose 20.6 million tonnes of the 24.7 million tonnes of Qatari LNG scheduled for delivery in 2026, before the conflict began, Rystad Energy said.
East Asia “better positioned”
According to Rystad Energy, East Asia is “better positioned” to weather the disruption, with spot purchases accounting for just 14.5 percent of imports.
A broader portfolio of supply contracts outside the Middle East and lower LNG demand help limit the region’s exposure to disrupted Qatari and UAE deliveries, it said.
Despite having the largest nominal exposure to Gulf contracts, East Asia faces the smallest relative increase in LNG costs among the regions outside the Middle East, at 9.7 percent.
Rystad Energy research shows that 82 percent of East Asia’s long-term LNG contracts are linked to oil, the price of which has risen far less than spot LNG.
Those LNG contracts are up about 28 percent compared with 72 percent for those tied to hub and spot price benchmarks.
In contrast, the average price in Europe is up 47 percent. Europe buys around 65 percent of its LNG on the spot market, while about a quarter of its long-term contracts are tied to gas price indexes, leaving it far more vulnerable to the full force of market volatility, Rystad Energy said.
South Asia, meanwhile, is adjusting primarily through lower imports, with Pakistan cutting purchases more sharply than India, Rystad Energy said.
In Africa and South America, Egypt and Brazil, respectively, are driving the rise in prices and import volumes, while the Middle East is adjusting through demand destruction, Rystad Energy said.
Implications
In terms of implications for importers, Europe’s result exposes a strategic shortcoming in relying on spot liquidity to secure residual gas demand, Rystad Energy said.
Rystad Energy noted that treating gas as transitional does not remove the need to procure volumes still consumed.
Deferring term procurement before substitutes are available leaves importers exposed to replacement-cost shocks. Contract tenor and volume flexibility should match residual demand, with supply origins and routes diversified, Rystad Energy said.
Moreover, Henry Hub indexation and supply routes address different risks, with Rystad Energy’s geostrategic analysis highlighting the value of ‘unchokeable’ supply that avoids maritime chokepoints or disputed waters.
US Gulf Coast deliveries to Europe bypass the Strait of Hormuz, while deliveries to Asia may face Panama Canal constraints or require longer alternative voyages, making Australian and Canadian Pacific supply important alternatives.
Importers should also scrutinize portfolio contracts for replacement obligations and sourcing flexibility when contracted cargoes cannot be delivered as planned, Rystad Energy said.
Expanding US liquefaction capacity creates further opportunities for importers to secure Henry Hub-indexed supply and diversify their exposure to global gas benchmarks, but it also strengthens the link between global LNG demand and the US gas market, Rystad Energy said.
Rising feedgas requirements from LNG terminals, alongside power-sector demand, could support Henry Hub prices even as new global liquefaction capacity eases spot prices in Asia and at the Dutch TTF benchmark.
Importers should therefore assess whether the current cost advantage of Henry Hub-indexed contracts is likely to persist over the full contract term, rather than assuming today’s price advantage will endure, Rystad Energy said.