Asian LNG Prices Set to Rise as US Threatens to Block Hormuz
(Bloomberg) -- Asian spot liquefied natural gas prices are set to rise as the US moved to blockade the Strait of Hormuz after Washington and Tehran failed to reach an agreement in peace talks over the weekend.
US forces will begin implementing a blockade of all maritime traffic entering and leaving Iranian ports on Monday at 10 a.m. New York time, the US Central Command said. They won’t impede freedom of navigation for vessels transiting the Strait of Hormuz to and from non-Iranian ports, Centcom said.
The failure of the peace talks raises concerns that LNG supply through the strait, which carried about a fifth of the world’s supply of the fuel before the war started at the end of February, will be hampered for longer. Oil and European natural gas surged in Asian trading on Monday.
Traders will be closely monitoring how aggressive China — the world’s top LNG buyer last year — refills its storage, and whether it needs to pull shipments away from Europe to do so. State-owned oil and gas company China National Petroleum Corp. has this month started injections into major underground storage sites across the west of the nation to ensure sufficient supply.
LNG prices have soared since the conflict broke out, though they have retreated from a high near $25 a million British thermal units in the week after the war started. Optimism the sides could reach a deal after agreeing to a ceasefire pushed prices lower last week, to just above $17.
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