Global LNG Supply Nearing Oversupply

Recently, market participants indicated that global liquefied natural gas (LNG) supply continues to expand. Over the next two years, with the concentrated commissioning of large-scale projects in major LNG exporting countries like the United States and Qatar, the pace of supply growth will further accelerate. Analysts predict that the growth rate of LNG supply will far outstrip global demand growth, with the market formally entering a phase of oversupply by the end of 6. This structural shift is expected to reshape the global LNG pricing system.

According to Kpler data, global LNG supply is projected to surge by 10.2% this year and next, reaching 475 million tonnes. This increment is equivalent to the total annual demand of South Korea, the world's third-largest LNG importer. The main drivers of LNG supply growth will gradually shift: the United States will lead before 2027, after which Qatar's LNG capacity expansion projects and newly approved US projects will successively enter the market, continuously amplifying supply volume. US LNG exports maintain strong momentum. The latest report from the Energy Information Administration (EIA) shows that US LNG exports will reach 14.9 billion cubic feet per day this year, a 25% increase from 2024. The Plaquemines LNG project in Louisiana is ramping up exports faster than expected, prompting the EIA to raise its export forecast for this quarter by 3% and anticipate a further 10% increase in export volume by 2026.

Industry giants and authoritative institutions have both warned of potential LNG oversupply risks. Chevron CEO Mike Wirth pointed out that future LNG supply will exceed the market's absorption capacity, most likely leading to lower spot prices. The International Energy Agency (IEA) also highlighted in its World Energy Outlook that global LNG supply is set to surge by 50% by 2030, with half of the new capacity coming from the US and 20% from Qatar. Although the IEA has raised its natural gas demand forecast, the pathway for absorbing the additional LNG remains uncertain.

Kristy Kramer, Head of LNG Strategy at Wood Mackenzie, believes that the unprecedented momentum in US LNG development is raising concerns about long-term oversupply. However, the new supply aligns with strong global fundamentals. European demand is expected to rise further as it decouples from Russian energy, and Asian market fundamentals are equally solid. Lower prices could improve LNG affordability, triggering the next wave of demand growth.

Regarding price trends, LNG spot prices are expected to rise in the short term, driven by peak winter demand in the Northern Hemisphere. However, if Europe does not deplete its gas reserves this winter and does not require large-scale restocking after the potential exit of Russian LNG in 2027, LNG prices could see a significant decline in the second half of 2026. Overall, 2026 is set to be a critical turning point for the LNG market, and the disruptive effect of the oversupply situation on prices warrants close attention.