Asia\u2019s spot LNG prices fell on Thursday from the three-year high hit on Wednesday after U.S. President Donald Trump pledged the United States would \u201cimmediately\u201d provide \u201cpolitical risk insurance and guarantees\u201d for tankers transiting the Strait of Hormuz.\u00a0\u00a0<\/p>\n
President Trump also noted that the U.S. Navy would escort energy tankers in the region if needed.\u00a0\u00a0\u00a0<\/p>\n
Although the plan has yet to come to fruition, spot LNG prices in Asia retreated slightly on Thursday from the $25.40 per million British thermal units (MMBtu)\u2014a three-year high<\/a>, hit on Wednesday.\u00a0\u00a0\u00a0<\/p>\n The Asian spot LNG price slipped to $23.80 per MMBtu on Thursday, traders told Bloomberg<\/a>.<\/p>\n Despite the pullback, the price has now more than doubled from last week before the war started and before Qatar, the world\u2019s second-largest LNG exporter, halted LNG production<\/a>.\u00a0\u00a0\u00a0\u00a0<\/p>\n Related: The U.S. Just Took a Giant Step in The Rare Earth Race With China<\/a><\/p>\n QatarEnergy on Wednesday also declared force majeure<\/a> to its affected buyers as tankers are not passing through the Strait of Hormuz right now.\u00a0<\/p>\n LNG shipments from Qatar and the United Arab Emirates (UAE), which jointly account for about 20% of global LNG supply, are now off the market, after QatarEnergy announced a pause to LNG production at its Ras Laffan hub and no tankers pass through the Strait.<\/p>\n As traffic via the Strait of Hormuz is effectively closed, the LNG supply shock to Asia is immediate, with Europe feeling the secondary effects of 20% of global LNG supply offline.\u00a0<\/p>\n As a result, both Asia\u2019s spot LNG prices and Europe\u2019s TTF benchmark gas prices have soared<\/a> in recent days to multi-year highs.<\/p>\n A total of 85% of Qatar\u2019s LNG exports go to Asia, so the immediate physical supply crunch is skewed toward Asia,\u00a0says<\/a>\u00a0Florence Yu, Associate LNG Market Analyst at Vortexa.<\/p>\n \u201cChina, India, and Taiwan are among the importers most exposed to this risk,\u201d Yu added.\u00a0<\/p>\n India, one of the most price-sensitive LNG buyers in Asia, is opting for lowering gas supply<\/a> to industrial customers, rather than buying LNG at the current elevated prices.<\/p>\n By Tsvetana Paraskova for Oilprice.com<\/a><\/p>\n