The global LNG market is at a pivotal juncture as geopolitical shifts between the US and Europe introduce new variables to established trade flows. Recent policy discussions, including potential tariff impositions and evolving energy strategies, could reshape LNG sourcing patterns in the coming years.
While the US has dominated European LNG imports since the Russia-Ukraine war, Europe may adopt a diversification strategy to hedge against future supply uncertainties. This shift could have significant implications for shipping demand and trade routes, potentially unlocking new opportunities for the LNG industry.
Europe’s growing dependence on US LNG
The US became Europe’s largest LNG supplier in 2022, following the shift away from Russian pipeline gas. The proximity of US export terminals to Europe, combined with its abundant supply, has solidified the transatlantic LNG trade. As a result, European LNG imports from the US surged, with over 70% of US LNG shipments directed to Europe in 2024.
If the second Trump presidency imposes tariffs on European imports, the continent would likely retaliate by reducing reliance on US energy. This would compel European buyers to seek alternative LNG sources, increasing long-term contracts with Qatar, Africa, and even Russia despite ongoing sanctions. While the US LNG supply will not disappear from Europe, a decline in its market share will shift global trade flows, impacting LNG shipping demand.
Europe’s search for alternative suppliers
Although Europe has sought to diversify its energy sources, the limited availability of spot LNG from other regions, coupled with disruptions in the Red Sea affecting Qatari cargoes, has maintained US LNG’s dominance. While African producers, including Nigeria, Algeria, and Angola, contribute to the supply mix, their production constraints limit their market share in Europe.
Even without US tariffs, Europe is already diversifying its LNG sources. The European Commission’s push to limit Russian LNG imports has had mixed success, with Spain and France among the largest importers of Russian LNG despite political pressure. In 2025, new LNG supply agreements with Qatar and African producers are expected to increase, further diluting US LNG dominance in the European market.
Southern Europe, in particular, faces infrastructure bottlenecks that limit intra-EU gas distribution. Countries like Italy and Spain, which have high LNG import capacity but weak pipeline connectivity to the rest of Europe, are increasingly reliant on Turkey as a transit hub. As NATO relations evolve and Turkey’s strategic importance grow, the country could become a key LNG gateway for Europe in the coming years.
Short-term scenario: Europe will continue sourcing US LNG (at large) but will gradually increase its imports from other destinations
In the near term, US LNG is likely to remain Europe’s primary source of supply, primarily due to its proximity to Europe and abundant spot LNG availability. The trade would be further supported by new liquefaction projects such as Plaquemines LNG (13.3 mtpa) and Corpus Christi Stage 3 (10 mtpa). These additions will ensure a steady flow of LNG to meet Europe’s rising import needs.
While an easing of Red Sea disruptions could revive Qatar’s exports to Europe, the limited spot availability – due to no new liquefaction addition in 2025 and contractual obligations with Asian buyers – may restrict Qatari exports to Europe. Africa’s LNG contribution is expected to grow with new projects such as Congo LNG (3 mtpa) and Greater Tortue Ahmeyim FLNG (2.5 mtpa), further enhancing Europe’s supply diversification. Rising European LNG demand and requirement for diversification will drive high investments in African LNG projects from European buyers, increasing Africa’s share in the European LNG market.
African and Qatari LNG projects would get a boost amid a growing share of exports to Europe. However, planned US projects (190 mtpa) could face short-term headwinds as European buyers may be wary of signing any LNG supply deals with the US.
From a shipping perspective, reduced competition between Europe and Asia for US LNG could support a more balanced trade flow. Increased US-Asia shipments would result in higher tonne-mile demand, a crucial factor for freight rates, particularly amid a looming vessel oversupply. In this scenario, LNG carriers could see improved utilisation despite an influx of newbuild deliveries through 2027-28.
Geopolitical developments have also influenced intra-European LNG distribution. Countries in Southern Europe, with limited integration into the continental gas network, are increasingly reliant on Turkey’s LNG import infrastructure. This shift allows regasified LNG to be fed into regional pipelines, providing an alternative route for energy imports.
Long-term scenario: Strategic diversification and higher tonne-mile demand to drive recovery
Over the long term, Europe is expected to adopt a more diversified LNG procurement strategy. While US supply will remain a key component of the region’s energy security, the risk of geopolitical volatility may drive European importers to expand their engagement with Middle Eastern and African suppliers.
Qatar is well-positioned to capture a larger share of Europe’s LNG imports, given its ongoing liquefaction expansion. The country’s North Field expansion projects, expected to add over 49 mtpa of capacity by 2027, will enhance its ability to serve both European and Asian markets. While current policy discussions between the EU and Qatar regarding sustainability regulations-such as EU’s new Corporate Sustainability Due Diligence Directive (CSDDD), which could possibly impose fines of up to 5% of a company’s annual global turnover for non-compliance) may introduce short-term challenges, the economic incentives for continued cooperation remain strong.
Additionally, the role of Russian LNG in Europe remains a subject of debate. While the region has sought to phase out Russian fossil fuel imports, its ability to do so entirely remains uncertain. In some cases, Eastern European buyers may consider securing alternative LNG arrangements, potentially reintroducing Russian supply into the mix over time.
Rising US-Europe tensions introduce new considerations for LNG market participants
While US-Europe trade tensions will disrupt LNG flows, they will also create new opportunities for shipping. Furthermore, US LNG will continue to play a central role in European energy security through 2025, a gradual shift towards diversification is likely.
The expected shift of European buyers towards Qatar, Africa and Russia will increase voyage distances, while US exporters will pivot to Asia, boosting tonne-mile demand. In the short term, market uncertainties and vessel surplus may weigh on freight rates, but structural changes in trade flows point to a stronger LNG shipping market in the long run.
The evolving landscape will demand adaptability as market participants navigate shifts in trade patterns and supply diversification efforts. By adapting to these shifts, LNG shipping companies can position themselves to capitalise on emerging trade patterns, ensuring long-term profitability in an evolving global energy landscape.
Source: Drewry
