Hormuz Disruption Sends Asian LNG Prices Soaring
The Strait of Hormuz shipping disruption has caused a surge in Asian LNG prices, pushing them from below $10 to over $25 per MMBtu in June. This price shock is benefiting U.S. LNG exporters in the short term, as their exports rose by 23% in the first half of 2024, reaching near maximum output levels.
However, the high prices are eroding the case for sustained gas demand growth in developing Asia. In India, gas-fired power generation fell 25% in the second quarter due to higher fuel costs, and other markets like Vietnam are reassessing their reliance on imported gas.
The disruption is also prompting a shift towards cleaner alternatives. Thailand has set a goal of helping 1mn households install 5 gigawatts of rooftop solar, aiming to reduce dependence on gas. Vietnam's Vingroup cancelled a $6.8bn plan for the country's largest gas-fired power station and moved instead toward a project based on solar and wind backed by battery storage.