Qatar's Force Majeure Extension Sends Global LNG Prices Soaring

Natural gas prices in Asia and Europe have surged due to Qatar's decision to extend its force majeure on LNG deliveries into November. The spot LNG price jumped to $23.388 per million British thermal units (MMBtu) on Friday, while the benchmark natural gas price at the Dutch Title Transfer Facility (TTF) rose by 2% in morning trade in Amsterdam, topping $80 (69 euros) per megawatt-hour (MWh).

The perfect storm of high demand for filling depleted storage and electricity during summer heatwaves, combined with slashed LNG supply due to Qatar's cargoes being trapped behind the Strait of Hormuz, has pushed European benchmark prices and LNG prices to their highest in three years.

Europe is heading into winter with gas storage sites barely 63% full, compared to a five-year average of about 80%. The situation is exacerbated by the fact that utilities in Asia have been outbidding Europe for LNG supply this summer, amid a shrinking pool of Middle East cargoes. Other producers cannot fully offset this shortage with increased deliveries.