Update to the Hormuz LNG supply model

Following user feedback, I have implemented several major improvements to the Hormuz Closure LNG Supply Impact Model, which was released on Tuesday alongside a free-to-read Deep Dive.

The biggest single change is a more dynamic treatment of how Hormuz LNG transits might evolve. The first iteration of the model allowed only a single ‘Hormuz reopening’ percentage cap and date, as if Hormuz flows would remain in a fixed state forever. In hindsight, this was unrealistic.

The new iteration allows users to set two key parameters: first, an initial partial reopening date from which exports resume at a user-defined percentage cap; and second, a final full reopening date when Hormuz LNG transits return to 100%. The model plots a smooth recovery curve between the two.

Users can now model different ramp-up scenarios for the reopening of Hormuz. If you think all sides in the conflict are strongly motivated to agree a peace settlement and restore Hormuz shipments quickly, you can model that. Or maybe you see diplomacy failing and open conflict hindering commercial shipping through the Strait for many years. You can model that too.

The resultant supply projections from different scenarios vary wildly, which I find valuable for understanding the profoundly dynamic situation confronting Middle East exporters.

My own view is that partial Hormuz LNG transits could resume at around 10% from September 2026, followed by a gradual restoration of flows to 100% in mid-2028. So I set the model to default to these.

New assumptions, more nuance

As a result of these changes (and a few tweaks to the underlying assumptions), the model outputs have changed quite dramatically in the Base Case.

Rather than depicting a cumulative supply deficit stretching into the 2030s regardless of the trajectory of the new supply wave, it now depicts a more nuanced picture: lost Hormuz capacity is offset by new projects in Q3 2027, and the cumulative supply loss evaporates by late 2028.

(This is a bit closer to the industry view: Edison CEO Nicola Monti yesterday said the LNG market will return to structural ⁠balance “over the next 18 months”, which probably reflects the reality of LNG supply flexibility, plus some slightly excessive corporate optimism.)

I have rewritten Tuesday’s Deep Dive, War vs. Glut: The Great LNG Reckoning, to reflect these changes. I would encourage all readers to check it out. It is free to read 👇

War vs. Glut: The Great LNG Reckoning

War shut in one of the world’s most critical export arteries. The long-promised supply wave is finally arriving. Which force wins, when, and by how much? Our new scenario data model brings clarity to the confusion.

💥 Energy Flux 💥Seb Kennedy

I think the results are more interesting and less depressing: an historic supply shock that will at some point be mitigated by an equally historic supply surge. The key question is when. The model can generate the answer; all you need to do is bring the ingredients.

The interactive model is reserved for subscribers on the Deep Dive and Premium tiers – and it is just one of the many benefits that comes with a subscription. If you’re on one of those paid plans, you can access the improved model immediately. Just log in and click here 👇

Hormuz Closure LNG Supply Impact Model

An interactive chokepoint closure scenario engine, supported by a global LNG project tracker and user override layer

💥 Energy Flux 💥Seb Kennedy

Thanks for reading,

Seb

P.S. If you want to upgrade to a paid plan but cannot do so via credit card, please contact us to discuss corporate billing and managed/group subscriptions. Energy Flux offers bespoke subscription solutions to suit all needs.

P.P.S. Debugging is time-consuming! The next Chart Deck will be published on Friday, all being well🤞