IEEFA: Strait of Hormuz disruption would jeopardise 10% of Europe’s LNG imports

Maritime chokepoints are narrow channels along widely used sea routes and are critical for the trade of oil and gas. Transit issues via any of the world’s main chokepoints usually lead to increased costs, longer journey times and disruptions to global trade.

Main maritime chokepoints

Due to geopolitical issues, piracy, weather conditions and other factors, transit via the main chokepoints has changed in recent years.

Transit via the Strait of Malacca, a crucial chokepoint for oil and gas shipments, is at risk of piracy attacks and armed robbery. The Panama Canal has been experiencing a severe drought, limiting the number of ships passing through it.

After the Strait of Malacca, the Strait of Hormuz is the second most important oil route, with about 35% of global seaborne oil supply and 20% of global LNG exports passing through it in 2024. The strait is located between Oman and Iran, linking the Persian Gulf with the Gulf of Oman and the Arabian Sea beyond. It has been at risk of being disrupted due to geopolitical issues but has remained open for now. Once again, this situation has shown the fragility of the oil and gas market.

LNG import and export terminals in the Persian Gulf

About 94% of the LNG exported from the Persian Gulf via the Strait of Hormuz comes from Qatar and the rest from the UAE. The UAE – which is also an LNG importer – and Kuwait source around 60% of their LNG imports from Qatar and the rest via the Strait of Hormuz from Nigeria, the US, and other countries. Bahrain started importing LNG in May 2025.

LNG transit volumes via the Suez and Panama Canals and the Cape of Good Hope have changed in recent years, while transit via the Strait of Hormuz has been steady at 20% average of global LNG trades.

In 2021, 7% of LNG trades were via the Cape of Good Hope, 10% via the Suez Canal, and 5% via the Panama Canal. In 2024, 15% of LNG trades were via the Cape of Good Hope, 1% via the Suez Canal, and 1% via the Panama Canal.

As geopolitical issues escalate, the risk of oil and natural gas supply bottlenecks increases. The more Europe imports fossil fuels, the more it is vulnerable to global geopolitical issues.

Although Asia is the main destination for LNG from Qatar and the UAE, Europe’s energy security could also be at risk if exports of the fuel from these sources are interrupted. Europe was the destination for 13% of LNG exports from Qatar and the UAE in 2024; 82% of the exports went to Asia. These volumes passed through the Strait of Hormuz.

Italy is the sixth-biggest importer of LNG from Qatar and the UAE, after Chi-na, India, South Korea, Pakistan, and Taiwan. Other European importers of LNG from these two countries include Belgium, Poland, Spain, the UK, and France.

About 50% of Europe’s LNG imports from Qatar and the UAE in 2024 were bought by Italy, 24% by Belgium, and 13% by Poland.

LNG transit via Bab el Mandeb – a strait between Arabia and Africa – and the Suez Canal decreased after July 2024 due to security concerns in the region. This contributed to Europe reducing its LNG imports from Qatar and the UAE by 26% in 2024, but Qatar still accounted for 10% of the continent’s LNG imports in that year.

Almost half (45%) of Italy’s LNG imports were from Qatar in 2024. That figure was 38% for both Belgium and Poland.

Impact of increasingly volatile gas prices

Gas and LNG prices are increasingly volatile and unpredictable. This has led to buyers from Europe and Asia competing for LNG cargoes on the spot market.

In August 2022, the gas price at the Netherlands’ Title Transfer Facility (TTF) reached a record high of US$70/million Btu, or €340/MWh. The price fell significantly by early June 2023. The decline was mainly caused by European gas demand dropping by more than 10% y/y in 1H23. In those months, Europe outbid Asian buyers for LNG cargoes.

High gas prices in 2022 and increased LNG imports led EU Member States to spend about €116 billion on LNG that year. EU countries spent about €225.3 billion on LNG imports in the three years between 2022 – 2024.

Oil and gas prices continue to fluctuate in 2025 due to geopolitical issues. The spread between TTF and Japan Korea Marker (JKM) natural gas prices has also been shifting, with TTF prices being below and above JKM on growing competition for LNG among European and Asian buyers.

War risk insurance premiums have affected the surge in LNG carrier rates over security concerns of an escalation of the Israel and US conflict with Iran and possible disruptions via the Strait of Hormuz.

High gas prices have a direct effect on electricity prices in Europe as gas-fired power stations are often the marginal source of electricity generation, setting the price when demand is high.

How to secure Europe’s energy supply

Europe’s energy security could be jeopardised by supply disruptions, increased import dependency, price volatility and market uncertainty, among other factors. But the continent has found ways to diminish this risk.

Reducing gas demand is key to decreasing dependency on LNG imports. European gas demand declined by 20% between 2021 and 2024. Its LNG imports fell by 19% year on year in 2024.

Among European countries, Italy, Belgium, and Poland are the most reliant on LNG imports that pass via the Strait of Hormuz. However, if they reduce gas consumption, their LNG dependency will also fall.

Europe’s ambition to become more energy independent could be achieved by decreasing its reliance on imported fossil fuels while diversifying energy sources and scaling up renewables deployment, electrification and energy efficiency.

Read the article online at: https://www.lngindustry.com/lng-shipping/27062025/ieefa-strait-of-hormuz-disruption-would-jeopardise-10-of-europes-lng-imports/