Strait of Hormuz crisis shifts LNG's biggest risk from supply to demand
Five months into the Strait of Hormuz crisis, the question still being asked is the obvious one: will the gas keep moving? It is not an idle question. When QatarEnergy declared force majeure in March, roughly one-fifth of the world's liquefied natural gas supply came off the market almost overnight. Last weekend brought the first sustained pause in hostilities in weeks, and oil promptly gave back…
The Strait of Hormuz crisis has shifted the biggest risk for the LNG industry from supply to demand, as reported by The National UAE. While the physical movement of gas has been relatively stable, with the first LNG carrier leaving the strait in July, the crisis has exposed a larger challenge for the industry. Supply risk and demand risk are now rising simultaneously, a situation LNG has rarely faced.
The industry's reliance on two assumptions - that once liquefaction capacity is built, supply can reliably reach global markets, and that demand will keep growing strongly enough to absorb it - is now in doubt. This dual risk has led to increased market volatility, with Asian spot prices reaching their highest levels in over three years.
Brief written by urgent.news from The National UAE's own syndicated text. Machine-written — it may contain errors, so check the original before relying on it.
