Global LNG Giant Warns Qatar Supply Disruptions Will Stretch Into Winter Amid Soaring Prices

The head of the world's largest liquefied natural gas buyer anticipates that ongoing disruptions in the Strait of Hormuz will continue, severely restricting supplies from a crucial region that previously provided roughly a fifth of the world's total supply prior to the Middle East war.

Yukio Kani, chairman and global chief executive officer of Japan's Jera, stated on Bloomberg TV on Friday that they do not foresee Qatari LNG returning to the global market anytime soon. He noted that LNG spot prices are currently double what they were at this time last year, adding that market participants are increasingly anxious about the upcoming winter season.

The absence of shipments from Qatar, which held the position of the world's second-largest supplier before the conflict, drove spot prices last month to their highest peak since late 2022. This tighter market conditions raise the specter of intensified competition between Europe and Asia, which house the primary buyers of the super-chilled fuel, as they scramble for alternative supplies from the US and other regions.

Data from Kpler indicates that while LNG shipments passing through Hormuz from Qatar and the United Arab Emirates managed to rise in September to their highest volume since the onset of the Iran war, overall transit remains 80 per cent below February levels. Last month, Qatar prolonged its force majeure declarations on deliveries to long-term buyers in Asia through November and to Europe through December.

Mr Kani pointed out that low seasonal gas storage volumes across Europe, combined with an impending European Union policy to prohibit Russian LNG imports starting in January, indicate that spot prices are poised to climb even higher. Should Europe face a severe winter, he warned that the continent will have no alternative but to aggressively purchase LNG for residential heating energy, potentially placing Europe in a deeply challenging position.