Benchmark Dutch and British wholesale gas prices shot up by nearly 50 percent on Monday, as major liquefied natural gas exporter QatarEnergy announced that it had shut down its operations following Middle Eastern attacks.
Qatar, which is about to become the second-largest exporter of LNG in the world after the US, is a significant player in the demand for LNG in both Asian and European markets.
Trade sources reported that the majority of the owners of tankers, oil majors, and trading houses have halted the crude oil, fuel, and liquefied natural gas shipments through the Strait of Hormuz, after Tehran warned ships against moving through the waterway.
Europe has raised the volume of imports of LNG in recent years in an effort to eliminate Russian gas after the invasion of Ukraine by Russia.
Approximately 20 percent of the global LNG passes through the Strait of Hormuz, and a long-term suspension or complete shutdown will cause competitive pressure in other sources of the gas, which will be reflected in the international prices.
Massimo Di Odoardo, Vice President, Gas and LNG Research at Wood Mackenzie, said, “Disruptions to LNG flows would reignite competition between Asia and Europe for available cargoes.”
ICE data showed that the Dutch front-month contract at the TTF hub, witnessed as a benchmark price for Europe, surged €14.56 at €46.52 per megawatt hour, or around $15.92/mmBtu, by 12:55 p.m. GMT.
The prices had already increased by up to 25 percent on an earlier day, but gains were extended following the production stoppage of QatarEnergy.
Platts data indicated that benchmark Asian LNG prices increased by nearly 39 percent on Monday morning as the S&P Global Energy Japan-Korea-Marker, most commonly used as an Asian LNG benchmark, surged to $15.068 per million British thermal units.
“If LNG/gas markets start to price in an extended period of losses to Qatari LNG supply, TTF could potentially spike to 80-100 euros/MWh ($28-35/mmBtu),” Warren Patterson, head of commodities strategy at ING, said. The British April contract was up 40.83 pence at 119.40 pence per therm, ICE data showed.
The recent data from Gas Infrastructure Europe reported that Europe is also using LNG imports to help stock its gas stores, which have been emptied during the winter and were at 30 percent capacity. The carbon benchmark contract in the European market fell by €1.10 at €69.17 a tonne.
