LNG Tankers Push Through Hormuz Again as Qatar, UAE Fight Supply Crunch

LNG tankers have recently managed to navigate through the Strait of Hormuz, despite months of near-total halts in shipments. Two LNG carriers have made the transit this week, with two additional vessels detected engaging in ship-to-ship transfers outside the Strait, according to Bloomberg's tanker-tracking and satellite data. This surge in LNG exports from the Persian Gulf, primarily by Qatar and the United Arab Emirates, indicates intensified efforts to ensure adequate supply as the chokepoint has been mostly stagnant over the past six months.

While oil flows through the Strait of Hormuz have rebounded to approximately two-thirds of their pre-war levels, LNG flows have remained scarce. Unlike crude oil, transferring LNG through the Strait and then reloading it via ship-to-ship transfers is considerably more challenging for Persian Gulf producers. However, satellite images have captured at least three such LNG cargo transfers offshore Oman outside the Strait in the past month.

Pre-war, the Strait of Hormuz experienced three LNG cargoes per day exiting. The significant reduction in LNG exports from the Middle East has driven gas prices in Asia and Europe to record highs since the 2022-2023 energy crisis, as buyers compete for limited supply that does not necessitate passing through the Strait of Hormuz.

As winter approaches and Europe seeks to replenish gas storage sites before December, LNG prices could potentially rise by about a third from current elevated levels, contingent on a colder-than-usual winter and intense competition for spot supply between Europe and Asia, according to analysts and industry experts.