Asia LNG hits four-month high on fears of wider Mideast shipping disruption

• The Strait of Hormuz, which typically carries a fifth of global LNG flows, has seen shipping fall to 'extremely low levels' as many shippers pause dark transits amid U.S.-Iran tensions
• Kpler revised its outlook to a prolonged crisis scenario, forecasting Qatar's LNG exports to fall below 27 million tons in 2026 and JKM prices to average $19.50/mmBtu in H2 2026, up from $14.60/mmBtu in previous de-escalation forecasts
• Europe must compete with Asia for spot LNG cargoes to improve storage levels ahead of winter, though current gas stocks remain 'well below a reassuring level' despite slow increases

Summary

Asia LNG Hits Four-Month High Amid Middle East Shipping Disruptions

Asia spot liquefied natural gas (LNG) prices rose for the fifth consecutive week, reaching a four-month high of $22 per million British thermal units (mmBtu) for September delivery into northeast Asia, up from $20.10/mmBtu the previous week. The increase reflects mounting concerns over shipping disruptions following attacks on Saudi oil tankers.

Key Drivers:

The escalation stems from ongoing U.S.-Iran tensions affecting two critical maritime chokepoints. Houthi attacks have severely curtailed Gulf shipments through the Strait of Hormuz, which normally carries one-fifth of global LNG flows. Risks have expanded to the Red Sea near the Bab el-Mandeb strait, where Saudi Arabia had redirected oil shipments.

Analytics firm Kpler revised its outlook from de-escalation to a prolonged crisis scenario, forecasting Qatar's LNG exports to fall below 27 million metric tons in 2026 (from approximately 80 million tons in 2025). Kpler now expects Japan-Korea Marker (JKM) prices to average $19.50/mmBtu in H2 2026, up from a previous forecast of $14.60/mmBtu.

Market Implications:

European gas stocks remain "well below reassuring levels," forcing Europe to compete with Asia for spot cargoes ahead of winter. Northwest Europe LNG prices for September delivery reached approximately $20.30-$20.518/mmBtu, trading at a slight discount to Asian prices.

The inter-basin arbitrage for August delivery to Europe remains closed, with freight rates showing Atlantic routes at $94,000/day and Pacific routes at $73,750/day. Analysts warn of prolonged price volatility and potential shortage risks in both Europe and Asia as supply uncertainty continues.