Global LNG spot prices hit highest since late 2022 as Qatar extends supply freeze
Transit through the Strait of Hormuz has fallen 80% from February levels, widening a shortfall that has doubled year-on-year
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Map: The Gulf and Hormuz, marking Strait of Hormuz
Global spot prices for liquefied natural gas have climbed to their highest since late 2022. Qatar has extended force majeure on its LNG contracts, and transit through the Strait of Hormuz has dropped 80% from February levels.
The resulting supply shortfall has doubled from a year ago. That has raised the prospect of a bidding war between Europe and Asia for US LNG cargoes, with Europe heading into winter on low inventories and a planned January ban on Russian LNG imports.
The Hormuz disruption has built over recent weeks. UKMTO has recorded seven vessel strikes near the strait since September 28, and Iran's Revolutionary Guard Corps has warned ships against using the US-backed transit route. Tanker traffic through the strait is running near two vessels a day, against a pre-conflict average of 125. On Friday, US official Kevin Hassett said the Navy had reopened the strait and that crude was flowing freely again. The same day, UKMTO reported a projectile strike that caused a fire and blackout on a tanker, the third unexplained strike since September.
The pressure building in the gas market is distinct from the oil supply story that has dominated recent weeks of diesel releases and crude softness. Qatar's extended freeze and the collapse in Hormuz transit point to a physical shortage of LNG rather than the risk premium that has driven Hormuz headlines through the Iran talks. With European inventories low and the Russian LNG ban set for January, a bidding war against Asian buyers for US cargoes could push up both US natural gas export demand and domestic prices as winter approaches.