2nd June 2026
There is currently a growing view among energy analysts that the world is heading into a period of LNG (liquefied natural gas) oversupply, although the picture varies by region and season.
Why is there a glut developing?.
The main reason is simple: supply is growing faster than demand.
1. Massive new export projects are coming online
Following the energy crisis after Russia's invasion of Ukraine in 2022, countries rushed to invest in new LNG production.
Major expansions are occurring in:
United States
Qatar
Canada
Australia
Many of these projects take years to build, so capacity approved during the crisis is only now arriving on the market.
Analysts expect global LNG export capacity to grow by roughly 30–40% between 2025 and 2030, one of the largest expansions ever seen.
2. Europe is buying less than expected
When Russian pipeline gas supplies collapsed, Europe feared chronic shortages.
Instead:
Energy efficiency improved.
Industry reduced consumption.
Renewable generation expanded.
Gas storage levels remained relatively high.
Countries such as Germany and Netherlands built LNG import terminals expecting huge future demand, but usage has often been below initial forecasts.
3. China's demand has disappointed
Many forecasts assumed rapid LNG demand growth from China.
Instead:
Economic growth has slowed.
Industrial activity has been weaker.
Coal remains important.
Renewable energy deployment has been extraordinarily rapid.
China is still a major LNG buyer, but demand growth has not matched some of the optimistic projections made a few years ago.
4. Renewables are reducing gas demand
Solar and wind installations are expanding rapidly in many countries.
Particularly in:
China
India
United Kingdom
Germany
Gas remains essential for balancing electricity systems, but it is not growing as quickly as many LNG exporters expected.
Why isn't LNG extremely cheap already?
Because LNG is a global market.
Several factors continue to support prices:
Asian buyers still compete for cargoes.
Shipping capacity can become constrained.
Geopolitical risks remain high.
The Middle East situation creates uncertainty.
Long-term contracts reduce the amount of LNG traded freely on spot markets.
So analysts often describe the market as "well supplied" rather than suffering a complete price collapse.
The Hormuz factor
This is where your previous question becomes important.
A significant share of global LNG exports comes from Qatar.
Qatari LNG leaves through the Strait of Hormuz.
If Hormuz were seriously disrupted:
The current LNG surplus could disappear quickly.
Asian LNG prices could spike.
Europe would need to compete more aggressively for cargoes.
Countries reliant on LNG imports could face shortages.
In effect, analysts see today's LNG market as having plenty of supply on paper but a major geographical concentration risk.
What does this mean for the UK and Scotland?
For the UK, a global LNG surplus is generally good news:
Lower wholesale gas prices.
Lower pressure on household energy bills.
Lower inflation.
Better energy security.
However, there is a downside for Scotland and the wider UK energy sector.
Lower gas prices can:
Reduce profitability for some North Sea projects.
Discourage investment in new gas developments.
Put pressure on parts of the offshore supply chain.
The bigger picture
Many analysts now believe the world could experience something similar to the oil glut of the mid-2010s:
Large amounts of new LNG supply arriving.
Demand growing, but not as quickly as expected.
Periods of relatively low prices.
The key uncertainty is geopolitical risk. If the Strait of Hormuz remains open and global economic growth stays moderate, LNG markets could remain comfortably supplied for several years. If Hormuz is disrupted, the apparent glut could evaporate almost overnight because so much LNG trade still depends on a few critical export routes.
Will a Glut of LNG reduce electricity prices?
In the UK, gas remains extremely important for electricity generation. Even when wind, solar and nuclear provide much of the power, gas-fired stations often set the market price because they are the last generators needed to meet demand.
Why cheaper LNG can reduce electricity prices
If global LNG supplies remain abundant:
Wholesale gas prices tend to fall.
Gas-fired power stations become cheaper to run.
Wholesale electricity prices usually fall as well.
Pressure on household energy bills is reduced.
This is one reason UK electricity prices fell significantly from the peaks seen during the 2022–23 energy crisis.
Why bills don't fall as much as gas prices
Your electricity bill includes much more than the cost of fuel:
Network charges (National Grid and local networks)
Environmental and renewable support schemes
Metering and billing costs
Supplier operating costs
VAT
As a result, a 20% fall in wholesale gas prices does not produce a 20% fall in household electricity bills.
The UK's particular problem
The UK has some of the highest electricity prices in Europe despite having substantial wind generation.
Many energy experts argue this is because the electricity market is still heavily linked to gas prices. Even when Scottish wind farms generate very cheaply, the market price can be influenced by the cost of gas-fired generation elsewhere in the system.
This has led to ongoing debates about electricity market reform and whether consumers should benefit more directly from low-cost renewable generation.
What about Scotland?
Scotland is in an unusual position:
It generates large amounts of renewable electricity.
It often exports power to England.
Wholesale prices can still be influenced by UK-wide gas prices.
Many Scottish commentators ask why a country with abundant wind, hydro and growing renewable capacity does not enjoy significantly lower electricity bills than elsewhere in Britain.
What analysts expect
If the expected LNG surplus develops over the next few years and there is no major disruption in the Strait of Hormuz, many analysts expect:
Lower wholesale gas prices.
Lower wholesale electricity prices.
Some reduction in household bills.
Less upward pressure on inflation.
However, few analysts expect a return to the very low energy bills seen before 2021 because network investment costs, grid upgrades, and other charges are much higher than they were then.
A global LNG glut should help keep UK electricity prices lower than they would otherwise be, but it is unlikely to transform household bills because gas is only one component of the final price consumers pay. Scotland's continuing debate is not just about the price of gas, but about why a nation rich in renewable energy still pays electricity prices largely influenced by international gas markets.