Hormuz Disruptions Slam Global LNG Shipping Costs

The Strait of Hormuz has seen significant disruptions to vessel traffic, leading to reduced available liquefied natural gas (LNG) carrier capacity. This has resulted in increased charter and marine fuel costs for LNG shipping, with prices reaching their highest levels since the peak of the 2022 energy crisis.

According to a report by the Gas Exporting Countries Forum's (GECF), the disruption triggered sharp increases in LNG chartering, bunker fuel, and war-risk insurance costs. The average bunker fuel price for the LNG carrier fleet rose 73% month-on-month in March to more than $800 per tonne.

The Strait of Hormuz serves as the only maritime export route for LNG shipments from Qatar and the United Arab Emirates, which together account for around one-fifth of global LNG supply. Following the escalation of the conflict in the Middle East on February 28, LNG exports from Qatar and the UAE came close to a standstill.

The report revealed that between March and June, more than 300 Qatari LNG cargoes and around 20 UAE cargoes failed to reach international markets. An estimated 160 LNG carriers were also stranded inside the Gulf or forced to remain at anchor in the Gulf of Oman, limiting the number of vessels available in the spot market.

Security risks along the Red Sea and Suez Canal route prompted LNG carriers to divert around the Cape of Good Hope, a major alternative maritime route between the Atlantic and Indian oceans. This added thousands of nautical miles to voyages between the Middle East and global markets.