Over the past month, Asia’s imports of LNG have plunged to their lowest level since the Covid pandemic crashed demand in June 2020, as the Middle East war trapped supply and pushed prices to multi-year highs.
The 30-day moving average of net LNG shipments to Asia plummeted below 600,000 tons this weekend, ship-tracking data compiled by Bloomberg showed on Monday. This was the lowest one-month moving average of LNG arrivals into Asia since June 2020, according to the data.
In China, surging LNG prices amid the war in the Middle East are set to lead to the lowest monthly LNG imports into China in eight years as Qatari and UAE supply is off the market, and Chinese buyers look to raise supply from domestic gas production and pipeline deliveries.
The de facto closure of the Strait of Hormuz has stranded all Qatari and UAE supplies of LNG. Additionally, Qatar’s LNG capacity has been severely damaged by Iranian missile attacks, which forced state firm QatarEnergy to declare force majeure on contracts and start quantifying the losses.
The Iranian missile attacks on Ras Laffan Industrial City (RLIC) dashed hopes of a quick resumption of Qatari LNG flows even if the Strait of Hormuz were to open to unimpeded and safe traffic today. QatarEnergy last month said the damage from Iranian missile strikes on the Ras Laffan LNG complex, the world’s single largest LNG-producing facility, would cost it about $20 billion per year in lost revenue and to take up to five years to repair.
As a result, Asian LNG prices have nearly doubled this month, and Asian buyers are outbidding Europe for spot supply.
The failed U.S.-Iran negotiations this weekend and the even more chaotic situation at the Strait of Hormuz are further delaying any meaningful recovery of LNG supply out of the Middle East.
By Tsvetana Paraskova for Oilprice.com
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