Middle East conflict drives LNG supply crisis, pushing buyers toward coal and oil alternatives
The resumption of the Iran conflict, including effective closures of the Strait of Hormuz and Bab el-Mandeb, has driven natural gas prices sharply higher in Europe and Asia. Asia accounts for nearly 90% of LNG shipments from key Middle East producers like Qatar and the UAE, while Europe imports 7-11% of its LNG from the region. European gas prices surged to four-month highs above €60/MWh amid winter shortage fears. Only 26 LNG cargoes have left the Gulf since the conflict began on Feb. 28, compared to the usual 90-100 per month. Iranian missile strikes damaged Qatar's Ras Laffan LNG Trains 4 & 6, sidelining about 12.8 million tonnes/year of capacity for 3-5 years. The Platts JKM benchmark for Asian LNG rose from $15 to $21.35 per MMbtu. India, Bangladesh, and Taiwan are seeking replacement cargoes on the spot market. India is switching to alternatives like naphtha, fuel oil, and propane as LNG becomes less competitive. Analysts warn that sustained high prices may require costly state intervention in Europe.
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