Qatar extends force majeure to November, sending Asian LNG spot prices soaring to their highest level since 2022.

With the Strait of Hormuz passage blocked and Qatar's force majeure declaration extended, Asian LNG spot prices rose 5% in a single week, with some buyers being turned away by the high prices.

The recent escalation of the conflict between the US and Iran has directly pushed Asian LNG spot prices close to the $26 per million British thermal units (MMBtu). On Wednesday, the Asian spot LNG price closed at $25.908 per MMBtu, a new high since 2022.

Trump stated that the U.S. military had destroyed newly constructed facilities deployed by Iran along the Strait of Hormuz, adding that he was "ready to launch the next strike" in strong terms.

Meanwhile, Qatar Energy extended the force majeure clause for its LNG deliveries to November, further dampening market expectations for the normalization of shipping in the Persian Gulf, and gas prices in both Asia and Europe saw a significant jump over the weekend.

The current situation indicates that the return to normal LNG shipments from the Persian Gulf is a long way off, and coupled with the seasonal rebound in demand, prices still have room to rise further, potentially forcing some buyers to exit the market.

South Asian buyers scramble for spot goods to replace long-term Qatari supply contracts.

The main driver of rising prices in Asia comes from South Asia.

According to Bloomberg, countries such as Pakistan and Bangladesh are actively seeking spot LNG to replace long-term contracted supplies from Qatar that cannot be shipped due to the closure of the Strait of Hormuz.

According to tender documents obtained by Bloomberg, utility companies in South Korea, India, Taiwan, and Bangladesh are all seeking spot cargoes for delivery in October and November, indicating a concentrated and urgent market demand.

However, not all buyers can afford the current prices. Earlier this week, Pakistan rejected an offer in its latest spot tender, citing BP's price of over $27 per million British thermal units (MMBtu). The country's state-owned gas trading company deemed the price too high and ultimately withdrew from the purchase.

Asia is not the only market under pressure. European natural gas prices have also risen in tandem, with European natural gas futures prices reaching their highest level since 2023 on Wednesday. This has put higher procurement costs on local buyers during the gas storage window before winter, making it significantly more difficult to build up reserves before winter.

The linked rise in gas prices in Europe and Asia reflects the systemic impact of the current Middle East situation on the global LNG market. With Qatar's force majeure ongoing and transit through the Strait of Hormuz blocked, the tight global spot LNG supply situation is unlikely to ease in the short term.

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