LNG Congestion Off Egypt Underscores Strain on Gas Markets

A growing queue of LNG carriers has formed off Egypt’s import terminals, unable to offload amid weak demand, infrastructure bottlenecks, and a scramble for regasification capacity. Natural gas (Zorrox: NaturalGas) and Brent crude oil (Zorrox: BRENT.) are already reflecting the stress in broader energy balances as markets adjust to the bottleneck.

Ships Waiting, Terminals Under Pressure

Vessels remain anchored off Ain Sokhna and Damietta, awaiting access as Egypt’s processing capacity lags cargo arrivals. Floating storage and regasification units remain stretched, with only a limited number fully operational and others sidelined by maintenance or delays. Egypt has recently sought to expand capacity by contracting additional units, but integration is still in progress, leaving ships idling offshore and costs rising.

Demand Slipping as Supply Risks Rise

Egypt’s domestic gas production continues to decline, deepening reliance on imports. Industrial and power demand has cooled, while renewables gradually reduce the role of gas in electricity generation. The visible backlog of LNG carriers reflects a sharper demand slowdown than anticipated. At the same time, global LNG output continues to expand, raising concerns that some assets may remain underutilized if consumption does not rebound.

External Pressures Amplify the Strain

Egypt is caught in a wider tug-of-war. European and Asian buyers continue competing aggressively for LNG cargoes, keeping pressure on availability. Longer-term supply contracts have been prioritized to secure volumes, but these arrangements are only effective if infrastructure can process deliveries. Political risk and cross-border gas deals add to the complexity, leaving Egypt with a fragile balance between contracted commitments and limited physical capacity.

Market Fallout and What Could Break the Logjam

Idle vessels are pushing charter rates lower, squeezing shipowners and adding volatility to forward curves. Delivery schedules are distorted, and risk premiums are now embedded into LNG pricing. Unless regasification capacity is expanded or demand recovers, the bottleneck could linger well into 2026. External shocks such as extreme weather or supply outages could quickly absorb the excess, but without such catalysts the congestion story is unlikely to fade soon.

Tips for Traders

• Natural gas (Zorrox: NaturalGas) volatility is giving traders fast setups tied to shifting congestion headlines

• Brent crude (Zorrox: BRENT.) could gain a premium if LNG stress spills into broader energy sentiment

• Falling charter rates are an early tell on oversupply pressure, worth watching for positioning

• Egypt’s ability to bring new regasification units online is a decisive swing factor

• Europe’s winter gas demand will determine whether Egypt’s backlog stays local or spreads globally

• Volatility trades in spot LNG remain attractive as balances shift unpredictably