Asian Gas Surpasses $30 for the First Time Since 2022 Following Attack Near Yemen

Asian spot liquefied natural gas prices surpassed $30 per million British thermal units for the first time since December 2022, following reports of an attack on a gas tanker in the Gulf of Aden off Yemen, according to Bloomberg.

The United Kingdom Maritime Trade Operations said a gas tanker was attacked by a small boat whose crew fired twice, and that the tanker's crew responded with warning shots. Observers believe the incident indicates that the normalization of energy flows from the Middle East is not imminent.

LNG has been trading above $25 for nearly a month as demand accelerates ahead of the winter heating season, with Asia and Europe competing to secure winter supplies. The trapping of Qatari gas, which accounted for about a fifth of global supplies, behind the Strait of Hormuz has led to reduced Asian demand as prices rise, while Europe is paying higher prices.

European gas inventories stood at around 74%, compared to a five-year seasonal average near 89%, leaving the continent with limited options after closing many coal plants. Conversely, the price surge could drive less wealthy Asian nations back to coal to meet their needs.

What Do These Terms Mean?

Liquefied Natural Gas (LNG): Natural gas cooled to minus 162 degrees Celsius to turn it into a liquid, making it easier to transport long distances by ship.

Million British Thermal Units (MMBtu): A unit measuring the amount of energy in gas, used to price gas in global markets.

Spot Market: A market where volumes are sold for near-term delivery rather than under long-term contracts.