politics
From the Arctic to Iran:
Gulf Shipping Crisis May Open Door for Russia’s Sanctioned LNG
The escalating armed conflict between the United States, Israel, and Iran has slashed shipping through the Strait of Hormuz, bringing tanker traffic to a halt and shutting down Qatar’s largest facility for liquefied natural gas, raising the prospect that supply disruptions in the Gulf could revive demand for sanctioned Arctic gas from Russia.
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The disruption of shipping lanes and supplies of liquefied natural gas (LNG) in the Gulf could have unexpected ripple effects for Russia’s Arctic LNG projects. The Strait of Hormuz carries roughly a third of the world’s oil supply and 20% of global liquefied natural gas shipments, much of it from Qatar, the world’s second-largest LNG exporter.
Around 80–90% of Qatari LNG typically goes to Asia, with major buyers in China, India, Pakistan and South Korea. With shipments halted and tankers avoiding the strait, Asian importers face tightening supply as inventories remain fragile at the end of winter.
“LNG is one of the most engineered and controlled industrial systems in the world – but it remains dependent on stable export routes. This is also a reminder not to take security of supply for granted. Yesterday it was Russia; today it is Qatar and the United Arab Emirates. When a strategic chokepoint closes, even the largest facilities must pause,” said Mehdy Touil, an LNG lead specialist with decades of experience in the industry.
Timelaps showing decline in shipping traffic in the Strait of Hormuz since February 28. (Source: MarineTraffic.com via Lloyd's Maritime Institute)
The crisis has cast an unexpected spotlight on Russia’s Arctic gas ambitions. Russia’s Novatek-led Arctic LNG 2 project has struggled to find buyers under U.S. and European sanctions, operating at roughly 3 million tonnes per year (mtpa) – well below its design capacity.
As sea ice retreats this summer, output could rise toward 6 mtpa, traders say. But with Gulf supply constrained and global LNG prices surging, discounted Arctic cargoes may become more attractive.
Novatek is reportedly selling sanctioned LNG at 30–40% below market prices, a discount that could entice buyers willing to navigate legal and reputational risks.
Will other buyers emerge
So far, China has been the sole taker. Cargoes have flowed to the Beihai LNG Terminal, which emerged last August as a key off-take point and has since received nearly three dozen shipments. The terminal has not been sanctioned despite multiple new EU packages, raising questions about enforcement.
Anne-Sophie Corbeau, a researcher at Columbia University’s Center on Global Energy Policy, said China’s own needs could complicate any shift.
“Given that China will be the most impacted [by Hormuz], and losing almost 30 bcm is a big number, even for them, I wonder whether they will let the ALNG2 cargoes go somewhere else? After all, they have been the only ones to take the risk...so far,” she said.
Volumes from Arctic LNG 2 remain small in global terms, just a handful of cargoes per month.
“The question is whether this will represent big volumes. So far, we have what? 3-4 cargoes per month?” Corbeau added.
Still, if Gulf supply disruptions persist, Russia could attempt to widen its buyer network beyond China. Countries facing shortages may reassess their stance, particularly if enforcement of sanctions remains uneven.
“Other countries will probably want to check that they are not going to risk the U.S. wrath by importing what are still ‘sanctioned LNG cargoes’. I am still in disbelief that the U.S. is not doing anything,” Corbeau said, adding that geopolitical realities could shift priorities.
“But I agree that given that the war is triggered by the U.S., telling countries – you can just stay in the dark – may not be the best diplomatic answer.”
How long will disruptions last
European buyers may also face difficult choices. The European Union continues to import large volumes of LNG from Russia’s neighboring Yamal LNG plant even as it maintains sanctions on Arctic LNG 2, leaving policymakers vulnerable to accusations of inconsistency if they penalize potential Asian buyers.
Analysts are also asking if this renewed supply insecurity could lead the EU to reconsider its ban on Russian LNG set to start on January 1, 2027. In recent months European buyers scooped up 90 percent or more of Russian supplies from Yamal, around 16 mtpa.
Does the current crisis complicate the EU's goal of replacing these volumes with supplies from other producers?
The duration of the Hormuz disruption will likely determine the outcome. Short-lived disruptions could see markets normalize quickly. But a prolonged crisis could tighten supplies, push prices higher, and give sanctioned producers an opening.
Shipping routes already face pressure after Houthi attacks in the Red Sea forced LNG carriers to detour around southern Africa. Russian Arctic LNG has avoided such delays by transiting the Suez Canal and Red Sea, cutting 10–15 days off voyages from Europe to Asia.
Even during the current crisis Russia’s LNG vessels continue using this shortcut, with at least seven vessels passing through or en route to these waters in recent days.
Norway and the broader Arctic region are watching closely. Much of Russia's Arctic shipping passes through Norway's economic zone. As traffic through polar waters increases, Arctic LNG projects have become part of a wider geopolitical energy equation, linking remote ice-bound facilities to conflicts thousands of kilometers away.
For now, the Strait of Hormuz crisis underscores a simple reality: energy security in a globalized LNG market hinges not only on production capacity, but on geopolitics and shipping lanes. And as sanctioned projects look for customers, turmoil in the Gulf may shape Russia’s Arctic fortunes in unexpected ways.
