Fears Of Surplus LNG Supply Grips Global Oil Market
By Naija Enquirer Staff
Fears of an overabundance in the supply of Liquefied Natural Gas (LNG) are triggering investment uncertainty across the global energy market, as forecasts of a sharp increase in output by 2026 raise concerns of a looming glut. As several countries ramp up investments in LNG production and export capacity, massive volumes of new supply are expected to come on stream following record shipments in 2025, intensifying debate over whether global demand can absorb the surge. This has raised critical questions about how much LNG is required to support the world’s energy transition, particularly as renewable energy capacity expands and climate policies tighten. Last year marked a record high for global LNG trade, with exports surpassing projections in several industry forecasts. The United States led the expansion, exporting over 100 million metric tonnes of LNG in 2025, driven by multiple new facilities coming online. Data from analytics firm LSEG showed that the U.S. exported an estimated 111 million metric tonnes (mmt) of LNG in 2025 — an increase of 23 mmt from the previous year — far exceeding Qatar’s 20 mmt, making America the world’s largest LNG exporter. The shipments accounted for roughly 25 per cent of global LNG exports. The Plaquemines LNG facility, operated by Venture Global, shipped an estimated 16.4 mmt in 2025 after commencing operations in December 2024, while several other U.S. plants also ramped up output following years of investment. In December alone, the U.S. recorded a monthly export high of 11.5 mmt. “It is remarkable that in nine years the U.S. has gone from zero LNG exports to over 100 mmt,” said Jason Feer, Head of Business Intelligence at shipping firm Poten and Partners. “The success validates the U.S. approach of selling free on board and the reliability of U.S. supplies.” Initially, fears of oversupply were offset by Europe’s growing demand following sanctions imposed on Russia after its invasion of Ukraine in 2022. European countries turned to the U.S. for alternative gas sources, purchasing 9 mmt of LNG in December 2025 alone. However, as Europe accelerates investments in renewable energy, concerns over excessive LNG dependence and future oversupply have resurfaced. Analysts warn that the U.S. could supply up to 80 per cent of Europe’s LNG imports by 2030, raising energy security and pricing risks. Several new projects are expected to deepen supply pressures. Plaquemines is set to reach full capacity in 2026, while Cheniere’s modular plants are also expected to reach peak output. Additionally, QatarEnergy and ExxonMobil’s Golden Pass LNG facility is due to start production this year. Together, U.S. LNG projects could boost annual production by another 20 mmt. The International Energy Agency (IEA) estimates that global LNG export capacity will increase by about 300 billion cubic metres annually between 2025 and 2030 — a 50 per cent rise — with roughly 45 per cent of this growth coming from the U.S. As supply rises, profit margins are projected to shrink. Saul Kavonic, Head of Energy Research at MST Marquee, noted that while U.S. LNG exporters enjoyed exceptional margins after 2021, new capacity is normalising prices. “Those margins have come back to more normal levels now as the market stabilises and new LNG capacity starts coming online,” he said, adding that sustained oversupply could push margins below historical norms, forcing producers to curtail output to support prices. Paradoxically, lower LNG prices could stimulate demand, as gas becomes more competitive relative to coal and oil, especially in power generation and industrial use. While the precise timing of a supply-demand imbalance remains uncertain, energy experts broadly agree that global LNG demand will continue to rise until at least 2050. This reverses earlier IEA projections that forecast an earlier peak in fossil fuel consumption. The shift reflects slower-than-expected renewable energy deployment and rapidly rising electricity demand, particularly from large-scale data centres supporting artificial intelligence and digital infrastructure. As 2026 approaches, expanding LNG supply is widely expected to exert downward pressure on prices, potentially ushering in the early stages of a global LNG glut, even as long-term demand growth remains intact.
