JERA CEO Warns LNG Prices Have Further to Climb

JERA's CEO Yukio Kani has warned that LNG prices will continue to rise in the near future, as the shipping obstacles in the Strait of Hormuz for Qatari supply are expected to persist through the winter. Kani stated that JERA does not anticipate a quick return of Qatar LNG to the market, as the protracted U.S.-Iran standoff has led to the force majeure extension of LNG deliveries to Asia and Europe by another month.

This shortage has driven both Asian spot LNG prices and Europe's benchmark natural gas prices to their highest levels since the 2022-2023 crisis. Kani expressed concern that there will be no immediate relief, and the upcoming winter could exacerbate price spikes. The spot price of LNG is expected to further increase due to historically low gas levels in Europe's storage facilities and the EU's ban on Russian LNG starting in January 2027.

The Iran war has altered the short-term outlook, causing LNG prices in Asia and Europe to soar to levels not seen since the 2022 crisis. Europe is struggling to meet its winter supply needs, while price-sensitive buyers in Asia are seeking alternative sources, leading to increased coal consumption and higher renewable energy targets to avoid supply shortages and high gas import costs during future energy market crises.

As of October 1, EU gas storage sites were at 71% capacity, significantly lower than the 86% average seen over the past five years. Major economies, such as Germany, have even lower-than-average gas stored, prompting concerns about supply security if the winter becomes colder than usual.