Liquefied natural gas prices on the Asian spot market topped $30 per million British thermal units for the first time since December 2022, Bloomberg reported earlier today. The price jump follows a report about a strike on an LNG tanker in the Gulf of Aden, off the Yemeni coast.
The UK Maritime Trade Operations outlet reported an LNG carrier coming under attack in the Red Sea, from a small boat, whose crew fired twice at the tanker. The tanker’s crew fired warning shots in return, the UKMTO said on Saturday. The report suggests a return to normal energy flows out of the Middle East is not forthcoming.
Liquefied natural gas has been trading above $25 per mmBtu for about a month now, as demand for the fuel picks up ahead of the winter heating season. Asia and Europe are locked in a race to secure as much gas for the winter as they can, regardless of prices.
Despite the reported attack in the Red Sea, on Monday Bloomberg reported a tanker carrying LNG from Qatar was making its way across the Red Sea, en route to Poland. QatarEnergy has a long-term supply deal with Poland’s Orlen, and despite a force majeure on exports issued soon after the war between the U.S. and Israel and Iran began, it has been trying to service such contracts.
According to Bloomberg, the Red Sea route could hasten delivery of Middle Eastern liquefied gas to Europe; however, the heightened risk of attacks on tankers could discourage stronger flows.
Meanwhile, as a result of the lack of Qatari gas, Asian LNG demand is declining amid high prices, while Europe is paying up for supply, but European storage sites are only 74% full this week, compared to a five-year seasonal average of around 89% at this time of year.
With the latest price jump, Asian demand could get dampened further, with less wealthy nations turning increasingly to coal. Europe does not really have the coal option as EU member states shut down many of their coal power plants as part of decarbonization efforts, leaving themselves no options but to pay any asking price for liquefied gas.
By Irina Slav for Oilprice.com
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