Asian LNG Prices Soar on US-Iran Tensions, Reach Highest Since 2022

Asian spot LNG prices have surged to their highest level since 2022, driven by tensions between the United States and Iran. The resumption of strikes in the region has disrupted supply chains, causing a shortage of liquefied natural gas (LNG) for Asian buyers.

The price hike is largely due to South Asian buyers, including Pakistan and Bangladesh, seeking spot supplies to replace term deliveries from Qatar that have been blocked by the Strait of Hormuz. Qatar's state-owned firm QatarEnergy extended its force majeure on LNG deliveries into November last week, further exacerbating the shortage.

Prices in Asia surged 5% this week, reaching almost $26 per million British thermal units (mmBtu). Utilities in South Korea, India, Taiwan, and Bangladesh are looking to buy spot cargoes for October and November. However, some buyers, like Pakistan's state-owned gas trading company, have rejected offers due to high prices.

President Donald Trump's statement that the US has taken out new equipment along the Strait of Hormuz has added to the tensions in the region, making it unlikely that normal LNG flows will resume soon. With a seasonal increase in demand for gas expected, LNG prices are likely to rise further, potentially pricing out some buyers.