LNG Deals and Diesel Bans Reshape Trade

One million metric tonnes per year. That is the volume Canada agreed to ship to Germany from a floating LNG terminal that does not yet exist, through a pipeline that faces legal challenges, to replace Russian gas that Europe spent two years learning to live without.

Canada announced Wednesday a landmark deal between the Ksi Lisims LNG project in British Columbia and Germany's SEFE—formerly a Gazprom subsidiary nationalized after Russia's invasion of Ukraine—to export one million metric tonnes of LNG annually to Europe , according to CBC News. SEFE was nationalized by Germany for 6.3 billion euros in 2022 after Gazprom ditched the business during Europe's energy crisis , Reuters reported. The proposed $10-billion floating Ksi Lisims LNG facility will have a capacity to export 12 million metric tonnes of LNG per year from its location 80 kilometres north of Prince Rupert in Nisga'a Nation territory . The deal is Canada's first major LNG supply agreement with Europe—a symbolic win for a country that has spent years promising to become an energy superpower but has struggled to move gas to tidewater.

The timing is no accident. The deal comes as the current Middle East conflict has increased European interest in energy security, with Reuters reporting last month that European buyers are exploring the possibility of purchasing liquefied natural gas from Canada's Pacific coast and shipping it through the Panama Canal . Sources told The Globe and Mail that SEFE intends to export the fuel to Asia, rather than directly to Germany via the Panama Canal, which would indirectly help Europe by freeing up supplies elsewhere in the world . It is a shell game, but one that matters: every molecule of Canadian LNG landing in Tokyo is a molecule of Qatari or Australian LNG that can flow to Rotterdam instead.

Can NextDecade Actually Build This Thing?

Across the continent in South Texas, another LNG story is unfolding—one less about ambition than about deadlines slipping. NextDecade's Rio Grande LNG is seeking a three-year extension from the US FERC to complete construction and place into service five trains at its LNG export plant in Texas , according to LNG Prime. The company requested that the Commission grant an extension until November 22, 2031, to construct and place into service its Rio Grande LNG Terminal, after the 2019 Order required completion by November 22, 2026 , per the Federal Register.

NextDecade stated that rehearing and remand orders from FERC have impacted timely financing and construction progress, and the issuance of remand orders prevented the company from reaching a final investment decision for Trains 4 and 5 due to lack of regulatory certainty . Translation: legal challenges and regulatory ping-pong ate years. The company said it has already invested significant capital towards development and construction of the terminal, in excess of $10.5 billion , Natural Gas Intel reported. At present, there are approximately 5,000 construction workers on site . The project is happening. It is just happening later than promised—a pattern that has become routine in U.S. LNG permitting.

NextDecade is not alone in seeking more time, but the extension request underscores a broader tension: global LNG demand is surging, driven by Europe's pivot away from Russian pipeline gas and Asia's coal-to-gas switching ambitions, yet new supply keeps getting delayed. The gap between what the market wants and what developers can deliver is widening.

What Happens When a Quarter of Your Refineries Go Dark?

While North America plans new LNG capacity, Russia is dealing with the consequences of losing a quarter of its refining capacity to Ukrainian drone strikes. The Russian government has reached the final stages of implementing a comprehensive ban on diesel and aviation fuel exports following a devastating wave of Ukrainian long-range drone strikes that have knocked out a quarter of the nation's total oil refining capacity, with key energy hubs including the Ryazan, Moscow, Kirishi and NORSI refineries processing roughly 238,000 tons per day , OilPrice.com reported.

Russia is considering limiting exports of diesel and jet fuel, according to Interfax, as refinery run rates fall to multi-year lows amid Ukraine's escalating attacks , Bloomberg reported. If introduced, the ban could put additional pressure on global fuel prices, as Russia is one of the world's key diesel exporters, selling around 40% of its production abroad , according to Ukrainska Pravda. By April, Russia's average refinery throughput dropped to 4.69 million barrels per day —the lowest level since 2009.

This is not a policy choice. It is damage control. A sustained Ukrainian drone campaign in May 2026 forced the Rosneft-owned Syzran oil refinery to fully halt operations, marking the sixth major Russian refinery knocked offline within a single month, with targeted strikes systematically disabling roughly a quarter of the country's national refining capacity, over 30% of its gasoline production, and around 25% of its diesel output , according to UNITED24 Media. Russia can still pump crude. It cannot turn that crude into diesel and jet fuel at the volumes it once did. The result is a country that used to export high-margin refined products now shipping discounted crude instead—a permanent margin loss disguised by temporarily elevated crude prices from the Hormuz blockade.

Why Is Aluminum Suddenly More Expensive Than Your Car?

The same Hormuz blockade that has kept oil prices elevated is wreaking havoc on a less-watched but equally critical commodity: aluminum. Aluminum increased to 3676.00 USD/T, the highest since March 2022, gaining 2.2% over the past 4 weeks and 45.16% in the last 12 months , according to market data from Trading Economics.

Aluminum futures in the UK rose to $3,680 per tonne amid prolonged supply disruptions from the Middle East, as the US struck Iranian targets and dimmed expectations that an agreement could restart vessel flows through the Strait of Hormuz, halting exports responsible for 9% of global supply, with direct attacks on the largest refiners delaying the eventual return of supply and EGA's flagship plant expected to return to capacity in one year . Alcoa CEO William Oplinger told investors that more than 2.5 million tons of annual smelting capacity and nearly 2 million tons of refining capacity have gone offline since the conflict began, much of it tied to the Strait of Hormuz, through which roughly 8.8 million tons of alumina and 6 million tons of bauxite transit each year , according to a Yahoo Finance analysis.

The aluminum shock is structurally different from the oil shock. Oil can be rerouted. Refineries can restart in weeks. Aluminum smelters that lose power and freeze their molten metal pots take years to repair. Direct missile and drone strikes targeted critical infrastructure at Emirates Global Aluminium sites in Al Taweelah and Jebel Ali, with resulting power failures causing the "freezing" of smelting pots—a catastrophic operational event where molten aluminum solidifies inside the cells, often requiring years of labor and massive capital expenditure to rectify , according to a commodities analysis published in April. Bernstein analyst Bob Brackett estimated that 7% of the world's aluminum is sourced from the Middle East region, with military strikes damaging facilities and taking about 3% of the world's supply off the market , CNBC reported.

The passthrough is already hitting manufacturers. Molson Coors finance chief Tracey Joubert said the rising price of aluminum supplied to the U.S. Midwest added around $30 million to the cost of goods sold in the first quarter compared with the prior year . Ford, which uses aluminum extensively in its F-150 trucks, has hedged its exposure for this year—but 2027 is another story.

Can Asia's Coal Habit Fill the Gas Gap?

The LNG squeeze is forcing an uncomfortable reality across Asia: when gas gets too expensive, coal comes roaring back. India, the world's third-largest carbon dioxide emitter, is burning more coal as energy supply disruptions due to the Iran war and a nationwide heatwave have boosted demand for the dirty fuel, with more than 70% of India's power generated from coal-fired plants , CNBC reported.

S&P Global Energy's Andre Lambine told CNBC that heatwave conditions with readings above 40-45 degrees Celsius across several places in India have lifted power demand, with gas-fired generation remaining 1.5 average gigawatts below 2025 levels, and a potential growth of 10% year over year for coal-fired power generation in India if the El Niño climate effect develops . India is bracing for a scorching summer and will rely more on coal to meet peak demand of 270 gigawatts—nearly twice the electricity Spain can produce—with enough coal for about three months , NPR reported.

In the month since the war in Iran began, the global price of coal has jumped more than 20% , according to Marketplace. The war has countries shifting back to coal to cover LNG shortfalls, with India burning more coal to meet higher summer demand, South Korea lifting caps on electricity from coal, Indonesia prioritizing domestic supply, and Thailand, the Philippines and Vietnam boosting coal-fired power . The irony is brutal: the same energy crisis that was supposed to accelerate the clean energy transition is instead breathing life into the dirtiest fuel on the planet.

What Changed This Week

Canada moved from LNG aspirant to LNG exporter—at least on paper—with its first major European supply deal, even as NextDecade's timeline slippage in Texas underscores how hard it is to bring new capacity online. Russia's refining crisis deepened to the point where a diesel export ban is now imminent, not optional. And aluminum, a metal most investors ignore until it is too late, surged to four-year highs as Middle East smelters remain offline with no clear restart timeline.

What to Watch

FERC's decision on NextDecade's extension request is expected by June 24, which will signal whether U.S. regulators are willing to grant more flexibility to LNG developers or hold the line on deadlines. Russia's formal announcement of diesel and jet fuel export restrictions could come within days, according to Interfax sources—watch for the effective date, which will determine how quickly global refined product markets tighten. And aluminum markets remain on edge for any further escalation near the Strait of Hormuz; analysts suggest that if the Strait of Hormuz remains closed through the summer of 2026, aluminum prices could test the $4,000-per-ton threshold . India's peak summer electricity demand will hit in June—if temperatures stay elevated and monsoon rains are delayed, expect coal burn to set new records.