LNG Tankers Cross the Strait of Hormuz as LNG Prices Hit Three-Year High

At least two cargoes of liquefied natural gas (LNG) crossed the Strait of Hormuz this week, as Persian Gulf producers look for ways to increase flows to a market suffering from supply shortages and rising prices, Bloomberg reports.

A tanker loaded at Qatar’s Ras Laffan export terminal in late August appeared earlier this week in the Gulf of Oman, according to Bloomberg-compiled vessel-tracking data — a sign it had passed through the contested waters. The vessel was not transmitting a signal while transiting Hormuz, but jamming and signal interference are common in the area, making it difficult to determine vessels’ exact positions.

In addition, two other LNG tankers were seen this week conducting ship-to-ship transfers off the coast of Oman, according to delayed Copernicus Sentinel-2 satellite imagery. The images show that since mid-August there have been at least three such LNG transfers near Oman — rare operations for liquefied gas, due to the technical challenges of keeping the super-cooled fuel during the switch.

The small trickle of cargoes shows that Gulf LNG producers are trying to push more fuel through Hormuz, to give some relief to Asian and European buyers. Exports from the Gulf have been virtually halted since Iran’s attack on a Qatari tanker in early July. The supply shortage has driven spot prices to their highest in more than three years, and they risk rising further as winter approaches in the northern hemisphere. QatarEnergy did not respond to a request for comment.

The continued fighting in the Middle East is forcing LNG producers to test alternatives. Buyers in Pakistan and Bangladesh — dependent on gas transiting Hormuz — are watching the situation closely, as each cargo that passes could mean they won’t need to buy a replacement on the expensive spot market. Before the war, about three LNG cargoes passed through Hormuz daily, and Qatari exports accounted for about a fifth of global supply.

Source: Bloomberg