How the 2026 Strait of Hormuz Crisis Reshaped Global Energy Markets

The 2026 Strait of Hormuz crisis — triggered by the US-Israeli air war against Iran beginning February 28, 2026 — has shut roughly one-fifth of global oil and one-quarter of global LNG trade, with direct damage to Qatar's export infrastructure compounding the supply shock . This dual disruption has delivered the largest energy supply disruption in decades . Here is how the major impacts break down by market segment.

LNG Supply: A Fifth of Global Output Knocked Offline

Around 20% of global LNG supply was knocked offline by the crisis. The Strait of Hormuz closure blocked over 80 million tonnes per annum (Mtpa) of LNG, mostly from Qatar, from reaching world markets . QatarEnergy declared force majeure on March 4 after Iranian drone attacks halted production .

Qatar lost 17% of its LNG export capacity — two of its 14 liquefaction trains — in the initial attacks on the Ras Laffan complex, costing an estimated $20 billion/year in lost revenue and potentially taking up to five years to fully repair, according to QatarEnergy CEO Saad al-Kaabi . Shell projects global LNG trade will be flat in 2026, with growth only resuming in 2027 if Hormuz reopens within three months . Enverus forecasts a structural global gas deficit of approximately 8 Bcf/d through 2026 .

QatarEnergy extended force majeure through September 2026 for some customers (e.g., Italy's Edison), signaling that disruptions will persist even after the strait reopens .

Asian Coal Consumption: A Sharp but Still Limited Pivot

Asian nations pivoted sharply to coal as LNG became scarce and prohibitively expensive. Japan cut gas-fired power generation by 16% year-on-year in June 2026, relying more on coal, with coal generation rising 4.6% . Coal shipments to Japan, South Korea, and the EU jumped 27% year-on-year in April 2026 . Newcastle coal futures (Asian benchmark) spiked 8.6% to $128.70 per ton on March 2, 2026, the sharpest single-day increase in three years .

However, the coal boost has been relatively modest in aggregate — the global rise in coal power output is estimated at no more than 1.8% for 2026 — smaller than the spike after Russia's 2022 invasion of Ukraine . Some analyses note that renewables, not coal, absorbed most of the gas-to-power gap in certain regions . Data from the first month after the closure showed global fossil fuel generation actually fell 1% year-on-year, with gas-fired generation dropping 4% while coal stayed flat, as record solar and wind buildout in 2025 helped reduce the need for fossil power .

European Gas Prices: Surging, Elevated, but Not Broken

European wholesale gas prices surged roughly 40% in the immediate aftermath (from approximately €30/MWh to over €50/MWh in early March) . Goldman Sachs warned prices could more than double (a ~130% jump) if the strait remained closed for a full month . HSBC revised its 2026 Dutch TTF (European benchmark) forecast 40% higher and expects prices to remain elevated through 2027 . The EU estimated that gas prices have risen 70% and oil by 50%, resulting in an extra €13 billion bill on fossil fuel imports .

By mid-June 2026, Europe had "passed the Hormuz stress test" in the sense that supply diversification (more US LNG, Norwegian pipeline gas, and demand reduction) prevented a full-blown crisis, but the market remains fragile with high prices and falling storage levels . The total gas bill for the 27 European Union countries ballooned by 48% in 2026 during the crisis . Chatham House warned that even if the strait reopens, Europe remains reliant on insecure and persistently expensive natural gas and should focus on reducing demand .

Refinery Operations: Tight Crude and Diesel Markets

Over 11 million barrels per day of Gulf crude and condensate production was curtailed as of May 2026 . Bloomberg reported that Europe faced surging costs to secure diesel cargoes and was at risk of diesel shortages because the Hormuz closure cut off a major source of middle-distillate feedstocks . The Kiel Institute estimates the closure triggered severe welfare losses in energy-dependent developing countries, with crude and product supply chains severely disrupted .

Specific data on individual refinery run cuts or closures is limited in available sources, but the broad consensus is that Gulf-origin crude and condensate shortages forced refiners — particularly in Asia and Europe that depend on Persian Gulf grades — to lower throughput or seek costlier alternative crudes .

Net Assessment: The Largest Energy Supply Disruption in Decades

The dual shock — Hormuz closure plus direct damage to Qatar's LNG trains — has delivered the largest energy supply disruption in decades, according to the International Energy Agency . LNG markets face a flat year with structural deficit. Asia is burning more coal as a stopgap, though the increase is modest compared to historical crises. European gas prices remain significantly elevated and above pre-crisis forecasts through 2027. Refinery operations are squeezed by lost Gulf crude and condensate volumes, with diesel markets particularly tight.