Gulf LNG Exporters Turn to Ship-to-Ship Transfers as Hormuz Blockade Enters Seventh Month

Six months after a blockade effectively closed the Strait of Hormuz to commercial shipping, Qatar and the United Arab Emirates are experimenting with emergency logistics solutions to sustain their liquefied natural gas exports, according to reports tracking the Gulf energy sector. The two countries remain among the world’s largest LNG suppliers, but their combined export volumes are still running well below pre-conflict levels, raising concerns among energy buyers in Europe and Asia.

The most significant development in recent weeks has been the use of ship-to-ship transfers — a method in which cargo is moved between vessels at sea, bypassing the need to transit the strait entirely. At least three Gulf cargoes have been handled using this technique in recent weeks, according to industry reports, marking the first meaningful test of the approach as a systematic workaround rather than an isolated contingency measure.

Ship-to-ship transfers are not uncommon in the global oil trade, but their application to LNG presents considerably greater technical and safety challenges. The cryogenic nature of liquefied natural gas, which must be kept at temperatures around minus 160 degrees Celsius, demands specialised floating storage and regasification units as well as precise coordination between vessels. The fact that operators are now proceeding with the method at scale signals growing pressure to find viable alternatives as the blockade shows no sign of imminent resolution.

European buyers watching closely as supply chains strain

The disruption carries particular weight for European energy markets, which increased their reliance on Qatari LNG following the reduction of Russian pipeline gas supplies in the wake of the 2022 invasion of Ukraine. Any sustained shortfall in Gulf exports risks tightening an already competitive global LNG market, pushing up spot prices and squeezing import budgets for utilities across the continent. Officials in several European capitals have reportedly been in contact with Qatari counterparts to assess the durability of alternative supply arrangements.

The UAE’s position adds another layer of complexity. While Abu Dhabi’s LNG output is smaller than Qatar’s, the country serves as a key transit and storage hub in the region. The blockade has disrupted not only direct exports but also the broader logistics infrastructure that underpins regional energy trade, according to analysts following the situation.

Alternative routing through the Strait of Bab-el-Mandeb and around the Cape of Good Hope has been explored but adds significant time and cost to each voyage, reducing the economic viability of certain contract arrangements. Some long-term buyers are reported to be invoking force majeure clauses or renegotiating delivery schedules in light of the ongoing disruption.

The broader geopolitical dimensions of the blockade remain unresolved. Diplomatic efforts to restore freedom of navigation through the strait have so far produced little tangible progress, according to reports from regional observers. For now, energy companies and governments alike are focused on pragmatic short-term measures, with ship-to-ship transfers emerging as the most operationally credible option available — even as industry experts caution that it is unlikely to fully compensate for the loss of direct export routes over the longer term.