Key Takeaways:
QatarEnergy has extended force majeure on LNG supplies to Asian buyers and is leasing out tankers through mid-October, as the Strait of Hormuz remains closed with no end in sight.
QatarEnergy extended force majeure on LNG deliveries to Asian buyers through mid-September and is leasing out tankers into October, as the Strait of Hormuz closure halts about a fifth of global LNG trade.
"The willingness to fix vessels as rates declined suggests Qatar is prioritizing fleet utilization over waiting for a market recovery," said Ikram Elloumi, director of research at Wood Mackenzie.
Three trade sources said QatarEnergy has extended force majeure on LNG supplies to buyers in South Korea and India, with notices that had been due to expire in August and early September now pushed to mid-September. Two other sources expect the extension to possibly last until October. At least nine LNG carriers controlled by QatarEnergy entities have been sub-chartered to third parties including Chevron, BP, EnBW, Cheniere, Kansai, SOCAR, LMCS and Trafigura, according to shipbrokers and Wood Mackenzie data.
Qatar accounts for about 20% of global LNG exports, all of which transit the Strait of Hormuz, where shipping has ground to a near-halt after renewed Iranian attacks on tankers this month. A prolonged outage would tighten supplies and push up prices for Asian buyers heading into the northern hemisphere winter, while Europe and Asia compete for available cargoes from the US, Australia and Russia.
Tanker Fleet Signals Extended Disruption
QatarEnergy entities QatarEnergy LNG Marketing and QatarEnergy Trading have offered some of their LNG tankers for lease through October on spot deals lasting 30 to 90 days, according to two shipbrokers. The company operates a fleet of nearly 70 LNG carriers. The sub-chartering comes despite falling freight rates in a rapidly weakening LNG freight market, Elloumi said.
The last time QatarEnergy faced a prolonged supply disruption was during the 2017-2021 diplomatic rift with Saudi Arabia, the UAE, Egypt and Bahrain, when the country's LNG exports were rerouted but never halted. The current closure of the Strait of Hormuz represents a more severe logistical challenge, as all Qatari LNG must pass through the waterway.
Market Impact and Forward Outlook
Gas prices in both European and Asian markets have risen this week after the US and Iran dismissed the possibility of immediate peace negotiations. Asian spot LNG prices have climbed as buyers scramble to secure alternative cargoes ahead of winter, when heating demand typically peaks.
The extended force majeure could push Asian spot LNG prices higher in the coming months, as South Korea, Japan and India — three of Qatar's largest customers — compete with European buyers for a shrinking pool of available supply. Japan's LNG imports from Qatar accounted for about 8% of its total last year, while India relies on Qatari LNG for roughly 12% of its gas consumption.
This article is for informational purposes only and does not constitute investment advice.
