OpinionConflict in the Middle East is boosting the value of the Arctic windfall

Gulf exporters are scrambling to bypass the Strait of Hormuz after Iran choked off most of the maritime traffic in one of the world’s most critical energy corridors. Saudi Arabia and the United Arab Emirates rushed to divert exports through overland pipelines; officials warned that even naval escorts could not guarantee safe passage. About a fifth of the world’s oil and liquefied natural gas (LNG) trade passed through this narrow waterway.

That shift is visible in Alaska. The US-backed Alaska LNG project now aims to finalise investment decisions on the pipeline this year and on the export terminal early next year, with first exports by 2031. With planned capacity of 20 million tonnes a year and preliminary commitments covering about 13 million tonnes, the project is gaining fresh momentum. Importantly, Alaska offers something Gulf suppliers cannot: direct access to North Asia without passing through Hormuz.

That matters, especially for Japan, South Korea and other Asian importers. JERA, Japan’s largest power generator, has said Alaska offers proximity to Asian demand centres and access to long-stranded large gas reserves, helping to support regional LNG supply security. Alaska LNG, in other words, is no longer just a commercial proposition. With instability in the Middle East, it is increasingly being reframed as an energy security asset.

But the Arctic windfall is not confined to the United States. Russia’s Arctic LNG, though sanctioned, has not been pushed out of the market altogether; part of it is continuing to shift towards Asian buyers. If the US is gaining from the security premium attached to a newly revalued project, Russia’s Arctic resources are also mattering more as a means of sustaining exports and economic resilience under pressure.

As the world places greater weight on resource security and shipping routes, the importance of Russia’s Arctic assets may increase – even as that importance remains constrained by sanctions and external pressure.