Hormuz Strait LNG Bottleneck Threatens European Winter Supplies

LNG prices are poised to surge further due to a persistent supply crunch at the Strait of Hormuz, where Middle Eastern LNG is stuck. Analysts and industry executives warn that European gas inventories are critically low, with storage sites across Europe less than 70% full.

This situation has intensified competition for spot supply between Europe and Asia, driving up prices in both regions. Spot LNG prices in Northeast Asia have jumped by $2.70 to $28.40 per million British thermal units (MMBtu) this week, according to Energy Intelligence assessments of deliveries one to two months ahead.

Cederic Cremers, president of Integrated Gas at Shell, the world's top LNG trader, warned that Europe is heading into winter with historically low storage levels. A cold winter could put the market under significant stress, with LNG prices potentially reaching $40 per MMBtu, equivalent to about $240 per barrel Brent.