LNG Bunker Snapshot: Prices fall amid hopes of de-escalation in Middle East conflict

Rotterdam's LNG bunker prices dropped for the second week in a row, falling $68 per metric ton to $1,420 per ton. This decline was largely due to a 2% drop in the front-month Dutch TTF Natural Gas contract, which is Europe's primary gas price benchmark. This decrease in TTF prices was attributed to forecasts of milder weather and hopes for reduced tensions in the Middle East, particularly following progress in US-Iran negotiations.

The International Energy Agency's gas analyst, Greg Molnár, noted the "reemergence of negotiations on the Strait of Hormuz," a key chokepoint for LNG shipments. Iran had proposed reopening the strait but faced rejection by U.S. President Donald Trump. Subsequent one-on-one talks between officials from both countries have generated optimism about renewed efforts to resolve the conflict.

This development, combined with the recent passage of several LNG carriers through the strait and the mild autumn weather in Europe, has put downward pressure on TTF prices. The front-month TTF contract has fallen as the market anticipates both increased ship traffic through the strait and milder weather in Central and Western Europe.

Meanwhile, the EU's underground gas storage reached 70.6% on September 25th, up slightly from the previous week but still 14.6% below last year's level. In Asia, Singapore's LNG bunker prices have declined more significantly, narrowing the premium over the ARA price to $147 per ton from $179 per ton a week earlier. The ARA price typically follows the NYMEX Japan/Korea Marker (JKM), which has fallen $1.70 per million British thermal units ($88 per ton) to $25.82 per million Btu ($1,342 per ton).

This decline in JKM was driven by reduced geopolitical risk as expectations of easing tensions in the Middle East grew, fueled by ongoing US-Iran dialogue. The decline in Asian LNG prices was also influenced by limited spot demand due to companies securing supplies for winter demand. Notably, Norwegian shipping company Höegh Autoliners has ordered six LNG dual-fuel pure car and truck carriers (PCTCs), while Luxembourg-based logistics company Compagnie Luxembourgeoise de Navigation has placed an order for two LNG dual-fuel vessels with South Korean shipbuilder HD Hyundai Heavy Industries.