LNG Shipments Halt as Strait of Hormuz Conflict Escalates

Exports of liquefied natural gas (LNG) through the Strait of Hormuz have come to a standstill over the past three days amid rising tensions in the region, according to tanker-tracking data. Reports indicate that oil tanker traffic has also significantly decreased, as military hostilities escalate.

Key Details

Analysts at ING noted that the current conflict is likely to have a more pronounced impact on gas markets than on oil markets. They stated,

If this latest flare-up follows the same pattern, any eventual resolution could again bring a slow LNG ramp-up—leaving the market exposed as we edge closer to the heating season.

This situation is particularly concerning for Europe, which may face supply vulnerabilities as winter approaches.

Recent reports highlighted a surge in Asian LNG prices, with the regional benchmark increasing by 25% over the past four weeks. The Japan-Korea Marker price has risen over 60% year-on-year, reflecting the disruptions in tanker traffic. Spot LNG prices in Asia reached $20.2 per million British thermal units on July 16, marking a 10% increase in just one week. Despite Qatar's efforts to boost LNG production in anticipation of a resolution, the situation remains precarious.

Background

Data from LSEG showed that since Friday, at least four tankers entered the Strait of Hormuz, but none were LNG carriers. Instead, three were likely oil product carriers, and one was a Very Large Crude Carrier, indicating a shift in shipping patterns amid the escalating conflict. For further context on the evolving situation, see Gulf Oil Exports Rebound Before Renewed U.S.-Iran Tensions and Oil Prices Surge Amid Escalating US-Iran Conflict.