Natural gas prices jumped in Asia and Europe on Friday after Qatar extended its force majeure on liquefied natural gas (LNG) deliveries into November. This decision comes as transit through the Strait of Hormuz remains blocked, which is hurting global LNG supply. In Asia, the spot LNG price rose to $23.39 per million British thermal units (MMBtu). In Europe, benchmark natural gas prices at the Dutch Title Transfer Facility (TTF) increased by 2% to over $80 per megawatt-hour (MWh).
Key Details
QatarEnergy has told buyers in Pakistan and Bangladesh that LNG cargo cancellations will continue through October. This extension affects planned deliveries to Europe, including long-term contracts with Edison of Italy. Earlier this year, Qatar's LNG exports faced major disruptions due to ongoing conflict in the region. This led to a reported loss of $24 billion in sales. Exports have dropped by as much as 96%, with only 18 LNG cargoes shipped this year. This is down from 509 during the same period last year, according to data from ICIS cited by Reuters.
Background
The situation is worsened by high demand for LNG as Europe prepares for winter. Gas storage levels are currently at 63%, which is significantly below the five-year average of 80%. The combination of tight supply and high demand has pushed prices to their highest levels since 2023. Unlike crude oil, LNG cannot be rerouted through alternative shipping methods, making the blockage particularly impactful.
Related coverage: Oil Traffic Through Hormuz Rises Amid Iranian Tensions.
The ongoing force majeure and high LNG prices are likely to affect energy markets, especially in Europe. Utilities are competing for limited supplies, which could lead to higher costs for consumers and businesses as they prepare for winter energy needs. Watch for further developments on Qatar's LNG exports and potential resolutions regarding the Strait of Hormuz blockade.
Based on reporting by: oilprice.com