en.Wedoany.com Reported - The global liquefied natural gas market is undergoing a structural shift, with geopolitical risks prompting buyers to prioritize energy security over cost, a trend that could long-term strengthen the market position of North American suppliers. This assessment was made by rating agency Morningstar DBRS at a credit insights conference held in Calgary.
Ravikanth Rai, Managing Director and Deputy Head of Energy & Natural Resources Ratings at Morningstar DBRS, noted that the unpredictability demonstrated by the Iran conflict over the past three months means that even a peace agreement cannot guarantee long-term stability, and geopolitical risks will continue to impact LNG trade. As buyers reassess their supply chains from an energy security perspective, supply sources from politically stable regions are expected to gain more favor.
The Strait of Hormuz previously handled approximately 20% of global crude oil and seaborne natural gas trade. According to Morningstar DBRS data, tanker traffic through the waterway plummeted by about 80% following the outbreak of the conflict, and attacks on Qatar's LNG export facilities have created a significant gap in global supply. Qatar contributes nearly one-fifth of global LNG production, and its damaged capacity may take three to five years to fully recover.
Andrew O'Conor, Senior Vice President of Energy & Natural Resources Ratings, stated that the supply disruption has created a global oil shortfall of approximately 8 to 10 million barrels per day, equivalent to 9% of total global demand. To compensate for lost production, both commercial and strategic reserves have been drawn down. According to estimates cited by Morningstar DBRS, global crude oil inventories have fallen by 3% to 5%, while refined product inventories have dropped by 8% to 10%, significantly reducing the market's buffer capacity to absorb further shocks.
Although Saudi Arabia and the UAE can export some crude oil via pipeline systems bypassing the Strait of Hormuz, there are no similar alternative routes for LNG exports from the Gulf region.
The North American natural gas market is currently relatively well-supplied. US gas storage levels are about 7% above the five-year average, while Canadian storage levels are roughly 4% higher. Sustained high production from basins such as the Permian, Montney, and Duvernay has supported supply and suppressed regional prices. Meanwhile, benchmark LNG prices in Europe and Asia have risen by approximately 50% since the conflict began, but liquefaction export facilities in the US and Canada are operating near full capacity, limiting their ability to fully benefit from higher international pricing in the short term.
Morningstar DBRS pointed out that the conflict has heightened market concerns over supply concentration and maritime chokepoints, driving buyers to place greater emphasis on supply reliability and geopolitical stability. Canada's LNG industry benefits from shorter shipping routes directly to Asia from British Columbia, avoiding the Strait of Hormuz and the Panama Canal; the US maintains its advantage through abundant natural gas resources, a well-developed pipeline network, and continuously expanding liquefaction capacity. These factors collectively solidify North America's position as a preferred LNG supply source.
This article is compiled by Wedoany. All AI citations must indicate the source as "Wedoany". If there is any infringement or other issues, please notify us promptly, and we will modify or delete it accordingly. Email: news@wedoany.com
