Asian spot LNG rose above $30 per million British thermal units on Monday for the first time since December 2022, a move that coincided with a reported attack on a carrier in the Gulf of Aden. The price had already held above $25 for roughly a month as the winter buying season gathered pace.
The trigger
UK Maritime Trade Operations said a small boat fired twice at an LNG tanker off the Yemeni coast on Saturday, drawing warning shots in return. The incident underscores that the Red Sea corridor, normally the quickest path for Qatari cargoes to Europe, remains contested. Bloomberg reported on Monday that a QatarEnergy vessel was nevertheless transiting the Red Sea bound for Poland under a long-term deal with Orlen, though Qatar had declared force majeure on exports after the U.S.-Israel-Iran war began.
Storage gap
European storage stands at 74 percent full this week against a five-year seasonal average near 89 percent. The shortfall leaves the continent with little cushion and no coal fallback; EU members have retired much of their coal fleet as part of decarbonization. Asia, by contrast, can switch to coal when LNG gets expensive, and the latest price spike may accelerate that substitution in less wealthy nations.
What to watch
The market is now pricing two opposing forces: a physical route that could shorten delivery times if it stays open, and a risk premium that rises every time a tanker comes under fire. Qatar’s willingness to honor term contracts through the Red Sea will test whether the corridor is viable or merely a one-off. Meanwhile, the storage deficit in Europe means any further disruption feeds directly into the bid.