US–Houthi truce may spur LNG flows via Red Sea and Suez Canal; gradual recovery expected

A recent ceasefire between the US and Yemen’s Houthi rebels could pave the way for a recovery in LNG shipping through the Red Sea and Suez Canal. But any rebound in flows is expected to be slow and tentative, with Houthi leaders maintaining that Israeli-linked vessels remain targets.

“Even if the truce is a step in the right direction, I think many players will remain cautious until there’s consistent evidence that navigation is truly safe,” Arturo Regalado, Kpler Insight senior LNG and Natural Gas Analyst said. “It’s likely the market will play a sort of game of chicken, with most participants waiting to see if a few early, brave players test the waters. If those initial transits prove successful and unthreatened, that could encourage others to follow, but it won’t happen overnight.”

The security crisis began in late 2023 when the Houthis started attacking commercial vessels in the Red Sea, citing retaliation for Israel’s war in Gaza. The attacks effectively closed the Bab el-Mandeb chokepoint to LNG shipping, forcing ships to reroute around the Cape of Good Hope, lengthening voyage times, and significantly reducing Suez Canal transits, particularly via the Red Sea.

"If successful, the ceasefire announced by the U.S. on May 6 could help restore safe navigation in the Red Sea and allow LNG export flows via the Suez Canal to recover some of the volumes lost since the crisis began in late 2023, Regalado said."

According to Kpler data,  LNG flows through the Suez Canal dwindled to 4.15 mt in 2024 from 32.36 mt in 2023 and 34.94 mt in 2022, while they increased by a little over five-fold from 11. 76 mt in 2022 to 59.37 mt in 2024 for LNG traffic via the Cape.

While market participants view the ceasefire as positive, they expect most shippers will continue to maintain the Cape of Good Hope as their base case for shipments to and from the Atlantic basin. But first moves could come from Qatar and Oman, they said.

“It’s definitely good news,” an LNG trader in Singapore said. “However, I don’t think it will change the shipping activity much, except originating from Qatar and Oman.”  

Qatar has historically been the largest source of LNG transiting the Suez Canal, accounting for 19.38 mt—or around 55.5%—of canal traffic in 2022. US volumes were the second largest that year at 6.08 mt. While Qatari flows fell significantly in 2023 and slumped to just 0.25 mt in 2024, US volumes rose to 8.76 mt in 2023 and declined more moderately to 3.35 mt in 2024, as Egypt resumed LNG imports and drew in more US cargoes.

The Suez Canal and Red Sea remain a faster, more direct corridor, whether from the Atlantic to Asia or the Middle East to Europe, and is a viable route for LNG trade when conditions allow, Kpler Insight’s Regalado said. It takes about 16 days to sail from Ras Laffan in Qatar to Zeebrugge via the Suez Canal compared to about 27 days via the Cape of Good Hope.

This year, out of 26 LNG ships to transit the Suez Canal, the Oman LNG-controlled Salalah LNG was the only ship to cross it via the Bab el-Mandeb Strait, based on Kpler data. The ship transited the canal on Feb. 12 after leaving Qalhat on Feb. 5. The 25 other ships entered the Suez Canal from the north to deliver into Ain Sukhna in Egypt, Aqaba in Jordan and Sagunto in Spain.