Asian LNG Prices Hit Four-Month High Amid Shipping Disruptions
Asian liquefied natural gas (LNG) prices reached a four-month high this week, driven by concerns over wider shipping disruptions. The average price for September delivery into northeast Asia was estimated at US$22 per million British thermal units (mmBtu), up from US$20.10/mmBtu last week, according to industry sources.
Kesher Sumeet, an analyst with Energy Aspects, attributed the price increase to the ongoing tensions between the US and Iran, which have severely curtailed Gulf shipments and tanker traffic through the Strait of Hormuz. 'Many of the shippers previously willing to do dark transits have paused… Transit condition is in an ‘ebb and flow’ situation, with no immediate path to de-escalation, keeping volatility and risk premiums firmly supported,' Sumeet said.
The conflict has also spread to the Red Sea, with attacks by Yemen's Houthis near the Bab el-Mandeb strait. This has led analytics firm Kpler to revise its base case view on Hormuz from de-escalation to a prolonged crisis scenario, forecasting Qatar's LNG exports to fall below 27 million metric tonnes in 2026.
As European gas stocks remain low, the region must now bid for spot LNG cargoes to improve storage levels ahead of winter. This will increase competition with Asia for Atlantic basin cargoes. The US front-month arbitrage to Northeast Asia via the Cape of Good Hope and Panama is firmly pointing to Europe and Asia respectively, according to Spark Commodities analyst Qasim Afghan.