LNG Prices Could Jump Further as Hormuz Supply Crunch Persists

LNG prices could see further increases as a supply crunch in the Hormuz Strait persists, according to analysts and industry executives. The current high prices are attributed to low European gas inventories and fierce competition between Europe and Asia for spot supply. Europe is heading into winter with one of the lowest gas storage levels in the past two decades, due to the Middle East war disrupting LNG supply from Qatar.

This has led to soaring gas and LNG prices in Europe and Asia, and increased competition for readily available global LNG cargoes. Spot LNG prices in Northeast Asia have risen by $2.70 to $28.40 per million British thermal units (MMBtu) this week, as assessed by Energy Intelligence. The global market has tightened, pushing prices to their highest levels since the end of 2022.

With Qatar and UAE still largely unable to supply LNG due to the Persian Gulf, Europe's refill rates are lagging and at a record low for this time of year, intensifying competition between Europe and Asia for non-Middle Eastern LNG supply. Cederic Cremers, president of Integrated Gas at Shell, noted that European gas storage sites are less than 70% full, compared to 82% for this time of year in 2025 and a 5-year average of above 80%.

The market faces a potential stress test during a colder winter when flow through Hormuz is not expected to increase significantly. Simon Flowers, chairman of energy consultancy Wood Mackenzie, warned that if the winter is colder than usual, LNG prices could surge from the current $30 per MMBtu to $40 per MMBtu, equivalent to about $240 per barrel Brent. This price hike could lead to demand destruction.