China Seeks to Curb Reliance on Qatar for Future LNG Supply

Chinese liquefied natural gas (LNG) importers are actively seeking to reduce their reliance on Qatar for critical energy supplies, as escalating geopolitical tensions continue to disrupt the Strait of Hormuz. The ongoing regional instability has prompted China to reassess its energy security strategies, creating widespread implications across global LNG markets.

The tensions intensified on February 28, 2026, when Iran largely blocked the Strait of Hormuz following air strikes by the United States and Israel against Iran. In retaliation, the Iranian Revolutionary Guard Corps (IRGC) issued warnings forbidding passage through the strait, boarded and attacked merchant ships, and laid sea mines. Further disruptions occurred in March 2026, when attacks on Qatar's Ras Laffan facilities forced QatarEnergy to declare force majeure on some long-term contracts, including those with China, with an estimated 17% of its LNG production capacity potentially offline for three to five years. Most recently, on July 7, 2026, the Qatari LNG tanker Al Rekayyat was struck near the Strait of Hormuz, further elevating war-risk premiums in the region.

China holds a substantial stake in Qatari LNG imports, with Qatar supplying approximately one-third of China's total LNG imports in 2025. This reliance directly exposes China's energy supply chain to the volatilities of the Strait of Hormuz, which is also a critical chokepoint for roughly half of China's crude oil imports. Consequently, Beijing is compelled to take urgent steps towards diversifying its supply sources and exploring alternative routes.

The developments have triggered significant volatility in energy markets. Brent crude oil prices surged past $100 per barrel on March 8, reaching a peak of $126 per barrel, marking the largest monthly increase in recent history. Asian spot LNG prices also saw a dramatic increase, nearly doubling in April 2026 to multi-month highs. According to the U.S. Energy Information Administration (EIA), disruptions in the Strait of Hormuz have also tightened global refined product markets, boosting U.S. refinery margins and exports. War-risk insurance premiums for shipping through the strait have risen substantially.

In response to these challenges, China is implementing several measures. The country is boosting domestic gas production, increasing pipeline imports from Central Asia, and enhancing its storage inventories. From January to April 2026, China's LNG imports declined by 20.5% year-on-year, while Russian LNG cargoes to China doubled during the same period. Furthermore, China resumed purchases of U.S. LNG in May 2026 and is pursuing long-term contracts to diversify its supply portfolio. China is increasingly acting as a regional LNG trading hub, re-exporting LNG across Asia.

Analysts and market observers anticipate that repairs to Qatar's damaged facilities will be protracted, and the absence of a viable alternative LNG export route bypassing the Strait of Hormuz will maintain the strait's strategic importance for global gas markets. While China's large inventory buffer and diversified supply portfolio offer some resilience compared to other Asian buyers, Wood Mackenzie indicates that the situation is forcing Beijing to make structural decisions, including a pivot back to coal and an acceleration in nuclear energy development. Moving forward, China is expected to further solidify its preference for pipeline gas imports and domestic energy resources.