(April 13): Asian spot liquefied natural gas (LNG) prices are set to rise, as the US moved to blockade the Strait of Hormuz after Washington and Tehran failed to reach an agreement in peace talks over the weekend.
US forces will begin implementing a blockade of all maritime traffic entering and leaving Iranian ports on Monday at 10 am New York time, the US Central Command said. They won’t impede freedom of navigation for vessels transiting the strait to and from non-Iranian ports, Centcom added.
The failure of the peace talks raises concerns that LNG flows through Hormuz, which carried about a fifth of the world’s supply before the war started at the end of February, will be hampered for longer. Prolonged disruptions to the strait could lift Asian spot prices above US$19 per million British thermal units, traders said, though that would be lower than a wartime high of US$25.
Traders will be closely monitoring how aggressive China — the world’s top LNG buyer last year — refills its storage, and whether it needs to pull shipments away from Europe to do so. State-owned oil and gas company China National Petroleum Corp this month started injections into major underground storage sites across the west of the nation to ensure sufficient supply.
Asian spot LNG prices were at just above US$17/mmbtu at the end of last week, dipping on optimism around a temporary ceasefire to the war.
Asian LNG imports have dropped to the lowest in almost six years as the conflict in the Middle East chokes supplies and forces buyers to curb consumption.
See also: Norway’s crude exports hit record value as oil price soared
European natural gas prices jumped after the US vowed to blockade all vessels passing through the Strait of Hormuz that called at Iran ports or were headed there.
Uploaded by Evelyn Chan
