LNG geopolitics: Sanctions reshape gas flows as reduced Russian supply fuels new volatility; US emerges as dominant but risky supplier

A new analysis by the Oxford Institute for Energy Studies has cautioned that the worldwide effort to move away from Russian gas is creating fresh instability in the market, largely because of tighter supplies and shifting political alignments. The report says that cutting reliance on Moscow has pushed several countries to depend more heavily on the United States, describing the shift as an increased dependence on “an increasingly volatile ally in the US.”

According to news agency ANI, sanctions on Russian energy have pushed global demand towards American LNG, placing the US in a position to dominate LNG supply growth. Its export capacity is expected to almost double by 2030, at a time when the global gas market is already facing upheaval.The study warns that although a new wave of LNG supplies may ease pressure later this decade, price swings are likely to worsen in the near term. Gas is increasingly being used to back up renewable power, and delays in new investments could trigger shortages. Such pressures, the report notes, could fuel political friction, especially if major producers accuse the EU of adding regulatory and pricing uncertainties.The institute also highlighted concerns over Washington’s push to expand markets for US LNG — a trend particularly strong under the Trump administration — saying this could politicise gas trade and undermine long-term buyer confidence.The long-term outlook for natural gas is already uncertain, with renewables challenging it in Europe and China, and coal remaining competitive in India and parts of Asia.Another risk flagged in the report is the United States’ influence over global energy flows through the dollar-clearing system, which enables it to impose unilateral or secondary sanctions. This power, the study says, increases the chance of disruptions and is encouraging countries like Russia, China, India and Iran to explore trade in local currencies.Globalised gas markets have further amplified these vulnerabilities. As per ANI, interconnected benchmarks now mean that a supply shock in one region can instantly raise prices elsewhere. After the Ukraine conflict, European and Asian gas prices effectively converged, turning Europe’s energy crisis into Asia’s.The volatility has raised concerns among major Asian buyers, including China and India, about whether LNG can be relied upon for power generation and industrial use in the long run.India on Monday announced that it signed a significant one-year agreement to source 2.2 million tonnes of LPG from the United States — around 10 per cent of its annual imports — as part of its wider strategy to diversify fuel supplies. The deal comes amid strained India–US ties following President Donald Trump’s decision to raise tariffs on India to 50 per cent.