Liquefied natural gas prices on the Asian spot market surpassed $30 per million British thermal units (mmBtu) on Monday for the first time since December 2022, Bloomberg reported, following reports of an attack on an LNG tanker in the Gulf of Aden off the coast of Yemen.
The UK Maritime Trade Operations center reported that an LNG carrier in the Red Sea was approached by a small boat whose crew fired twice at the tanker. The tanker's crew returned warning shots, UKMTO said. The report suggests a return to normal energy flows from the Middle East is not imminent.
LNG has traded above $25 per mmBtu for about a month as demand picks up ahead of the winter heating season. Asia and Europe are competing to secure as much gas as possible for winter, regardless of price.
Despite the reported attack, Bloomberg reported Monday that a tanker carrying LNG from Qatar was crossing the Red Sea en route to Poland. QatarEnergy has a long-term supply agreement with Poland's Orlen and has been trying to fulfill such contracts despite a force majeure on exports issued soon after the war between the U.S. and Israel and Iran began.
The Red Sea route could speed delivery of Middle Eastern gas to Europe, according to Bloomberg, but the heightened risk of attacks on tankers could discourage stronger flows.
As a result of the lack of Qatari gas, Asian LNG demand is declining amid high prices, while Europe is paying a premium for supply. European storage sites were only 74% full this week, compared with a five-year seasonal average of about 89% at this time of year.
The latest price surge could further dampen Asian demand, with less wealthy nations increasingly turning to coal. Europe lacks that option, as EU member states have shut down many coal plants as part of decarbonization efforts, leaving them no choice but to pay whatever price is asked for liquefied gas.
