Middle East Conflict Drives Global LNG Hunt, Prices Soar

The global hunt for liquefied natural gas (LNG) has intensified due to the ongoing war in the Middle East, causing supply flows to shift. At least nine LNG cargoes initially headed to Europe have diverted to Asia since the conflict began.

A buffer of spare supply is quickly drying up, threatening more competition and higher prices for both regions. LNG suppliers like Shell Plc are declaring force majeure for customers across Asia due to halted flows from the Middle East.

The Ras Laffan LNG export facility in Qatar has been shut down, along with a smaller plant in Abu Dhabi, amounting to about 20% of global LNG supply. If this situation persists, there may not be enough alternative sources to sufficiently supply the market, according to Mathieu Utting from Rystad Energy.

The conflict is causing prices in both Europe and Asia to soar dramatically over the past week, sparking fears over inflationary pressures and economic ramifications. Asian buyers are turning to the spot market to supplement their term supplies, but challenges are emerging with recent tenders going unawarded due to a lack of sellers and sky-high prices.