Middle East Flare-Up Set to Push Back LNG Oversupply by a Year

By the Editorial Team · Thursday, July 23, 2026

BloombergNEF has revised its forecast, projecting the global LNG market will enter oversupply in 2028 instead of 2027, due to conflict-related disruptions and delays in major export projects. This delay underscores ongoing uncertainties in Middle East LNG production and shipping routes, which will influence the timing and scale of future supply growth.

The global liquefied natural gas (LNG) market is projected to enter a phase of oversupply in 2028, a year later than previously anticipated, due to the ongoing conflict in the Middle East and delays in several major export projects. This revised outlook was detailed in a report released on Tuesday by BloombergNEF (BNEF).

The updated forecast shifts the expected peak of excess LNG supply to between 2031 and 2032, as a number of new export facilities are scheduled to come online during that period. This represents a delay from last year’s projection, which had predicted an oversupplied market beginning in 2027.

The shift is largely attributed to disruptions caused by the war in the Middle East. Qatar’s Ras Laffan industrial complex, the world’s largest LNG export facility, sustained damage from missile strikes attributed to Iran. These attacks have significantly curtailed LNG shipments transiting the Strait of Hormuz, a critical maritime route responsible for roughly 20% of global LNG trade before the conflict escalated.

While a brief recovery occurred in LNG transport following an interim US-Iran peace agreement last month, renewed hostilities have once again hampered passage through the strait. This has added uncertainty over how soon energy flows through the region might return to normal levels.

BNEF analysts noted that Qatar’s LNG output faces a range of uncertainties in the near term, linked both to existing operations and to plans for expansion. The pace of supply growth will depend on the speed of repairing the two damaged production trains at Ras Laffan, as well as the timeline for commissioning six additional trains associated with the North Field expansion project.

Beyond technical challenges, the report emphasized that commercial strategy will play a significant role. Slower contracting activity in the aftermath of the conflict could postpone the rollout of new projects. Conversely, QatarEnergy, benefiting from relatively low production costs, may choose to increase volumes more quickly to compete with US LNG producers, particularly as the market enters an oversupply phase.

Despite the short-term disruptions, total LNG production in the Middle East is expected to grow substantially over the next decade. BNEF projects a 50% increase in output from the region, reaching 147 million tonnes by 2030, before rising further to 153.8 million tonnes by 2035. The United Arab Emirates is also anticipated to contribute to this growth, although geopolitical tensions are likely to reduce production temporarily in the current year.

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