- ICIS data confirms LNG production in Qatar and UAE remains within normal levels, despite Strait of Hormuz tensions and vessel signal disruptions.
- Over 80% of Qatari LNG is directed to Asia, but any supply risk could shift US cargoes away from Europe, impacting global pricing.
- Asian LNG prices remain volatile and at a premium to Europe’s TTF, with geopolitical uncertainty adding upward pressure.
Despite escalating rhetoric from Iran about the potential closure of the Strait of Hormuz, LNG production from Qatar and the UAE remains within expected norms, according to ICIS data. The ICIS update on June 23 noted that 43 vessels had loaded from Qatar’s Ras Laffan terminal in the past 15 days, matching the same period in 2024 and only slightly down from the previous 15-day window, well within the range for Qatar’s 77.4 million tonnes per annum (mtpa) capacity, according to ICIS.
Similarly, the UAE’s Das Island terminal saw four cargoes loaded in the same period—one more than last year but one less than the preceding 15 days. This reflects stable output amid regional uncertainty.
Vessel Tracking Complications and False AIS Signals
While production remains stable, vessel tracking has become more challenging. ICIS analysts report that several LNG tankers near Qatar have been transmitting false Automatic Identification System (AIS) positions. Nonetheless, recent confirmed sailings include the 138,000 cbm Disha eastbound through Hormuz, and the 152,000 cbm Al Areesh and 174,000 cbm Al Sakhamah. The Raahi was observed crossing westward in ballast on June 23.
Global LNG Price Volatility and Key Trade Flows
Since early June, global spot LNG and gas prices have trended higher, driven by growing concerns over regional instability. The Dutch Title Transfer Facility (TTF) has become highly reactive to geopolitical developments, reflecting Europe’s strong dependency on LNG imports. In contrast, Asia’s spot LNG market, represented by the ICIS East Asia Index (EAX), remains more volatile and often moves in tandem with TTF movements rather than local fundamentals.
Though Asia accounts for 82% of Qatari LNG exports in 2024, any disruption in deliveries—real or perceived—could have ripple effects on European markets. Rising US LNG production has shifted Europe’s supply dependence towards the United States, but in a supply crunch, US cargoes could be redirected to Asia if spot prices there surge, tightening availability in Europe.
Asian Premium and Market Balancing Risks
Currently, Asian LNG prices carry a modest premium of around $0.50/MMBtu over the TTF, enough to support transatlantic flows from the US to both markets. However, a significant supply disruption in the Middle East could push the Asian premium above $2/MMBtu, which may divert more US LNG toward Asia.
Such a shift would tighten European gas supply and could trigger a broader rise in European energy prices. While most Asian LNG remains oil-indexed, spot-linked contracts would reflect immediate price increases. Any significant spot price surge could also suppress demand among more price-sensitive Asian buyers.
Strait of Hormuz Closure Unlikely, But Market Still Alert
While an extended closure of the Strait of Hormuz remains unlikely due to probable intervention by major global powers, even brief disruptions could trigger widespread market reactions. Traders and suppliers would need to rapidly optimize contracts, charter routes, and risk management strategies.
The current balance between stable production, steady exports, and geopolitical risk leaves the LNG market walking a tightrope, closely monitoring regional developments that could quickly tip the scales.
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Source: ICIS
