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2026-05-26 10:47:38
[Global Natural Gas Market Closely Monitors Weather Variables: Strait of Hormuz Closed for Nearly Three Months, LNG Prices May Rise Another 50%] (1) The Strait of Hormuz has been almost completely closed for nearly three months, disrupting about one-fifth of the world's liquefied natural gas (LNG) supply, but this has not triggered an extreme price surge, mainly due to weak demand during the off-season. However, analysts warn that if the strait remains largely closed, LNG prices may rise by another 50% by August. Currently, LNG is flowing to Asia, where prices are higher, and US shipments originally destined for Europe have been diverted to Asia. (2) With summer high temperatures combined with the El Niño weather pattern, temperatures in East Asia (Japan and South Korea) are expected to be above normal (about 1.5°C higher in Japan and 0.5-1°C higher in South Korea), and air conditioning demand will push up electricity load. Japan is facing a heat wave, and spot electricity prices have soared to their highest level since 2022, and its purchasing flexibility may significantly impact the LNG market. In addition, El Niño will also lead to drought in India and reduced hydropower in South America, further boosting LNG demand. (3) Europe's situation is not optimistic: low hydropower water levels and declining river levels are affecting nuclear power, and there is enormous pressure to replenish reserves before winter. Executives at Statoil warned that there is simply not enough physical natural gas, and the situation becomes more critical with each day the conflict continues. If Asian demand continues to recover, Europe will face an even more intense LNG competition, and prices may rise sharply.
