Alexandra MorenoCrude oil (USO) has stayed on edge as the Strait of Hormuz standoff drags on, but the more urgent commodity story is playing out in liquefied natural gas, where Taiwan's near total reliance on imports has collided with a blocked shipping chokepoint and a shutdown in Qatari production.
In Brief
- Taiwan gets 99% of its natural gas from imports, and about a third of its 23.6 million tonnes of LNG in 2025 came from the Gulf.
- Qatar and the UAE sent zero LNG cargoes to Taiwan in April and May after Hormuz closed and Qatari output stopped.
- US LNG shipments to Taiwan hit a record 700,000 tonnes in April, up from about 200,000 tonnes in March.
- Landed LNG prices in Taiwan have jumped from roughly $10 per MMBtu in February to about $17 per MMBtu now.
- Gas fired plants supply about half of Taiwan's electricity, putting semiconductor and solar panel manufacturing at risk if the shortfall persists.
Why Gulf Supply Disruptions Are Hitting Taiwan So Hard
Taiwan bought almost 8 million tonnes of LNG from Qatar last year plus another 200,000 tonnes from the UAE, together accounting for close to a third of its total LNG intake. That flow stopped cold once Qatar's gas production went offline and tankers already loaded found themselves stuck behind a blocked Hormuz. Taiwan took in 1.9 million tonnes of LNG in April, close to the same month a year earlier, but that headline number masks a scramble underneath it. The country simply had to find replacement barrels fast, and it found them in the United States.
American cargoes to Taiwan jumped from around 200,000 tonnes in March to 700,000 tonnes in April, the largest monthly total the US has ever shipped there. That is a useful emergency valve, but spot cargoes bought under pressure cost more and compete directly with every other importer doing the same thing. CPC, the state owned gas and oil company that handles most of Taiwan's LNG purchases, has been trying to cut its Middle East exposure for months. Chairman Fang Jeng-zen pointed to a new US supply deal worth 1.2 million tonnes a year as part of that pivot, though that kind of contract takes time to ramp up and does nothing to plug the immediate gap.
Australia, Russia and the Limits of Alternative Supply
Australia remains Taiwan's other major supplier, delivering close to 8 million tonnes in 2025 under contracts that have held steady for three years. But Australia has its own domestic gas squeeze building, and a new rule takes effect in 2027 requiring a fifth of LNG export volumes to stay onshore. Contracts signed before December 22, 2025 should still be honored, covering Taiwan into September, but there is little room for Australia to send meaningfully more gas in the near term.
Russian LNG sits there as an obvious, if awkward, option. Taiwan bought four Yamal cargoes this year totaling about 350,000 tonnes, a fraction of the 1.8 to 2 million tonnes a year it used to import from Russia before the war in Ukraine changed the political calculus. For now, Taiwanese authorities have ruled out leaning on Russian supply again, which removes what might otherwise be a fairly quick fix.
Coal's Comeback and the Squeeze on Taiwan's Power Grid
Gas fired generation covers roughly half of Taiwan's monthly electricity output of about 24.1 terawatt hours, and about 85.5% of the country's LNG use flows directly into power plants. If the missing Gulf cargoes stay missing past June, Taiwan could lose more than 2 terawatt hours of gas fired generation a month, just under a tenth of demand, right as summer cooling season pushes consumption higher.
Coal is the fallback, as it has been for other countries in the region facing similar gas shortfalls. Coal already supplies about 35% of Taiwan's power, and four mothballed units at the Hsinda plant, with roughly 2 gigawatts of combined capacity, have been pulled back into emergency service. Together they could add around 1 terawatt hour a month, enough to cover roughly half of the potential gas shortfall but no more. Coal supply itself is tightening too: Taiwan's April coal imports of 4.5 million tonnes were the lowest in five years, down 5% from a year earlier. More than half of that coal comes from Australia, where FOB Newcastle prices have climbed 25% year over year to around $130 a tonne. Australia is shipping close to the limit of what it produces, and China and Japan are chasing the same cargoes, leaving Taiwan expected to receive only a modest bump to about 2.6 million tonnes in May. State utility Taipower, which controls about 66% of generation with independent producers supplying the rest, has been stockpiling coal since January, though inventories only buy time rather than solve the underlying shortage.
| Fuel source | Recent status | Constraint |
|---|---|---|
| Qatar and UAE LNG | Zero cargoes in April and May | Hormuz blockage, Qatari output halt |
| US LNG | Record 700,000 tonnes in April | Expensive, spot exposed |
| Australian LNG | Stable near 8 million tonnes annually | Domestic reservation rule from 2027 |
| Coal (Hsinda emergency units) | Around 1 TWh per month available | Covers about half the gas gap |
What the LNG Shortage Means for Taiwan's Broader Energy Security
Taiwan has been forced to rely far more heavily on the spot LNG market than it planned. Term contracts used to cover about 70% of imports, with spot purchases filling the rest. With Qatari volumes gone, spot reliance has climbed to somewhere between 60% and 65%, and it shows up in price: landed LNG in Taiwan has gone from about $10 per MMBtu in February to roughly $17 per MMBtu now, with no clear sign of relief.
Nuclear power looks like the obvious long term answer but offers nothing for this crisis. Taipower has asked regulators to restart the Kuosheng and Maanshan plants, taken offline in 2023 and 2025 when their 40 year licenses expired. Fully restarted, the four reactors could add about 30 terawatt hours a year, but that outcome realistically sits years away, past 2028, leaving it irrelevant to this summer's demand peak. Official LNG reserves stood at only around 11 days of consumption in early May, according to media reports, even as authorities insist supply is secured on the spot market and through Australian contracts into September. The real risk sits with Taiwan's semiconductor and solar manufacturing base, industries that would likely face rationing before households do if the gas shortfall widens, a scenario with implications well beyond the island's own power grid.
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