Asian LNG prices set to fall after US, Iran agree to ceasefire
The Strait of Hormuz has been mostly shut since the war broke out
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[SINGAPORE] Asian liquefied natural gas (LNG) prices are set to fall after the US and Iran agreed to a two-week ceasefire that could temporarily reopen the Strait of Hormuz, bringing respite to global energy markets.
US President Donald Trump agreed to suspend bombing for two weeks if Iran agreed to a complete and immediate opening to the Strait of Hormuz. Iran said that safe passage through the strait will be possible via coordination with the nation’s armed forces during this period, though details of the agreement have not been specified.
A reopening of the key waterway – through which around one-fifth of the world’s oil and LNG transits – would help ease global LNG supply concerns. The strait has been mostly shut since the war broke out, sending multiple nations scrambling for alternatives as prices surge.
No ship loaded with LNG has been recorded passing through the strait since the US and Israel launched attacks on Iran at the end of last February. Attempts by loaded LNG carriers to exit the Persian Gulf via the waterway have been aborted, while one reportedly empty LNG carrier passed through the chokepoint over the weekend.
Asian LNG prices more than doubled to US$25/mmbtu in the week following Feb 28. Prices have since pulled back slightly. BLOOMBERG
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