Wedoany.com Report on Mar 7th, Due to the situation in the Middle East, oil tanker traffic through the Strait of Hormuz has been obstructed, causing fluctuations in Qatar's liquefied natural gas (LNG) supply. This has prompted several LNG carriers to reroute to Asia, with regional buyers actively seeking alternative cargoes.
Vessel tracking data from Kpler and LSEG shows that three LNG carriers have already adjusted their routes to head for Asia. Among them, the Simsimah and Clean Mistral tankers, which departed from the US terminals at Plaquemine and Corpus Christi, turned towards the South Atlantic on March 4th. The BW Brussels, loaded from Bonny, Nigeria, also changed course on March 3rd and is currently heading towards Asia via the Cape of Good Hope.
Price data indicates that on Thursday, the US Henry Hub benchmark price was $2.97 per million British thermal units (MMBtu), the European TTF price was $17.01, and the Asian Japan-Korea Marker (JKM) was $15.495. The higher prices in Europe and Asia are sufficient to cover the increased transportation costs, attracting LNG carriers to reroute.
Kesher Sumeet, an analyst at Energy Aspects, stated: "In recent days, cargoes have started shifting from Europe to Asia. The prevailing JKM-TTF spread is significantly higher than the US transport differential, suggesting that flexible US cargoes might start flowing to Asia due to stronger netbacks."
Although some Asian buyers have slowed procurement due to rising prices, others are securing supplies at higher prices. Sumeet pointed out: "Buyers from South Korea, India, Taiwan, Bangladesh, and Thailand have been looking for alternative spot cargoes, but many are still hesitant to award tenders due to high prices or a lack of offers." He added that India and Bangladesh are acquiring spot cargoes at prices above $20 per MMBtu, but the procurement volumes are lower than the levels affected by the Qatar supply disruption. Asian buyers may not be able to fully replace all the missing Qatar cargoes in March and April.
Bangladesh has secured two spot cargoes from Gunvor and Vitol at $28.28 and $23.08 per MMBtu, respectively. A power company in western Japan is also seeking alternative cargoes, as it originally planned to receive deliveries from Qatar starting in June 2026. Another major Japanese power company, concerned about tight supply in late March and early April, is seeking prompt cargoes, according to Masanori Odaka, an analyst at Rystad Energy.
The rerouting of LNG carriers could intensify competition between the Atlantic and Pacific basins. Asia accounts for over 80% of Qatar's LNG exports, while Europe has become increasingly reliant on LNG to replenish storage since reducing Russian pipeline gas imports after the Russia-Ukraine conflict.
Qasim Afghan, an analyst at Spark Commodities, stated that although the global front-month arbitrage was open to Asia earlier this week, by Thursday, the US front-month arbitrage was firmly pointing towards Europe. High freight rates and a narrowing JKM-TTF spread have made Europe more competitive.
