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(Bloomberg) — Asian liquefied natural gas prices rose to the highest since late March as fresh hostilities in the Middle East deepened concerns that shipping through the key Strait of Hormuz will remain disrupted for longer.
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Spot LNG traded at about $20.2 per million British thermal units, according to traders, after surging about 10% over the past week.
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The conflict has intensified in recent days as the US and Iran feud over control of the strait, a key conduit for about a fifth of global LNG supply. The US carried out more strikes on Iran to pressure Tehran to stop attacking vessels and reopen the Strait of Hormuz. Iran’s Islamic Revolutionary Guard Corps said Wednesday the passage will stay shut until the US ends its strikes and the blockade of Iranian ports.
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Renewed tensions have already pushed Asian buyers to seek more cargoes. Pakistan purchased its most expensive spot shipment in four years at around $20.70/mmbtu, according to traders, as a planned delivery from Qatar was canceled due to Hormuz disruptions. Other countries including India, Thailand and Bangladesh have also recently issued tenders for supplies.
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Ship movements have slowed to a near standstill since the US resumed its naval blockade of Iran after a wave of attacks on commercial vessels, although a handful of them have still made the crossing. A prolonged disruption would keep LNG supplies tight, particularly for Asia, where buyers rely heavily on Qatari cargoes. Spot LNG is now trading at roughly twice its pre-war level.
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“For Asian buyers, this further delays the hopeful return of Qatari volumes,” Evan Tan, an LNG analyst from ICIS, said. “Assuming geopolitical tensions continue into the next couple of months, a storage-short Europe and firm Asian demand will have both regions bidding up spot prices through later parts of the year,” he added.
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More News:
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- Posco is seeking to purchase about six LNG cargoes/year for delivery to South Korea from 2030 for a period of 10 years
- Pakistan LNG purchased a cargo on a DES basis for July 21-22 delivery from PetroChina
- Santos is offering an LNG cargo on a DES basis for 1H Sept. delivery to ports in North Asia
- A US liquefied natural gas carrier appears to have reached a Chinese terminal, potentially marking the first American cargo taken by China since it imposed tariffs over a year ago
- The Iran war, and its disruptions across global energy markets, is spurring investments for new US liquefied natural gas export infrastructure, according to consulting firm S&P Global
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Drivers:
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- European natural gas futures steadied near a three-month high after the US launched fresh strikes on Iran following a series of shipping attacks by the Islamic Republic this week
- China’s 30-day moving average for LNG imports on July 15 was 165k tons, 7.8% lower than the same time last year, according to ship-tracking data
- European gas-storage levels were ~53% full on July 14, compared to the five-year seasonal average of ~68%
- Europe’s 30-day moving average for LNG imports was 125k tons on July 15, 12% lower than the five-year seasonal average, according to ship-tracking data
- Estimated flows to all US export terminals were ~16.6 bcf/day on July 15, down 10% w/w: BNEF
- Spark Commodities data indicates it is more profitable to send US LNG to Europe than Asia
- The netback to Northwest Europe is assessed as $0.298/mmbtu higher than to Northeast Asia via the Cape of Good Hope
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Buy tender:
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Sell tender:
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