GLOBAL LNG-Asia spot LNG prices at 3-year high as U.S.-Iran crisis prompts Qatari supply halt
By Marwa Rashad
LONDON, March 6 - Asia spot liquefied natural gas prices more than doubled compared to last week and reached their highest level in over three years after a production halt by Qatar, which provides 20% of global LNG supply, has resulted in a scramble for gas.
The average LNG price for April delivery into north-east Asia was estimated at $22.50 per million British thermal units (mmBtu), the highest level since mid-January 2023 and over double the price of $10.40/mmBtu the previous week, industry sources said.
"The market repriced violently this week as it digested Qatari shut-ins and Hormuz flow restrictions. Fundamentally, with the exception of China, north Asia is tightening significantly, and south-east Asia will be priced out almost entirely," said Toby Copson, managing partner at Davenport Energy.
"There is very little marginal supply available to pivot to so we will start to see U.S. cargos re-route to Asia as the arbitrage is now open and the premium is there versus Europe. Freight will be the denominator in the short term," he said. Over 80% of Qatari supply goes to Asia.
It would take "weeks to months" to return to normal deliveries, Qatari Energy Minister Saad al-Kaabi told the Financial Times, expecting gas prices to rise to $40/mmBtu.
"We see the Hormuz disruption lasting at least until mid-March, though the impact on supply is likely to extend well beyond that. We think the Qatari supply will be out for a minimum of four weeks," said Tom Purdie, lead LNG analyst at consultancy Energy Aspects.
"The impact will be felt primarily in Asia. Qatar and the UAE together hold around 71 million tons per annum of long-term contracts with Asian buyers - the backbone of the region’s baseload supply. Replacing even part of that through spot purchases, U.S. cargo rerouting and the use of contract flexibility will take time," he added.
Buyers in India, Pakistan and Bangladesh are particularly impacted, being price sensitive and reliant on Qatari volumes. Some Indian buyers have not awarded import tenders, instead choosing to wind down some industrial production, said Martin Senior, head of LNG pricing at Argus.
In Europe, gas prices rose over 60% this week, but slowed those gains on Friday. Europe appears to be losing the bidding war with Asian competitors over U.S. cargoes, with prices now at $17.57/mmBtu.
Platts, part of S&P Global Energy, assessed its daily Northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in April on an ex-ship (DES) basis at $16.998/mmBtu on February 26, a $0.13/mmBtu discount to the price at the TTF hub.
Argus assessed it at $16.95/mmBtu, while Spark Commodities assessed the March price at $17.165/mmBtu.
Investment funds, typically most actively trading in prompt and spring/summer 2026 contracts, are expected to be even more active due to the challenges of refilling EU gas storage over the summer after the loss of Qatari volumes, said Seb Kennedy at Energy Flux, an independent analytics platform.
In global LNG freight, Atlantic rates hit their highest since December 2022, rising to $264,250/day, and Pacific rates rose to $219,250/day, said Spark Commodities analyst Qasim Afghan.
