Surge of 650%! Middle East conflict intensifies, LNG ship rental skyrockets to $300,000/day

The global liquefied natural gas (LNG) shipping market has recently surged dramatically, with daily rental rates for LNG carriers skyrocketing from about $40,000 last week to around $300,000 now, an increase of approximately 6.5 times. Due to escalating tensions in the Middle East, traders are rushing to lease ships.

According to the latest weekly LNG report from shipbroker Fearnleys, spot rates for 174,000 cubic meter LNG carriers on the route from the Gulf of Mexico to Europe have risen to about $300,000 per day, up roughly $260,000 from last week.

The key route from the Gulf of Mexico to Asia has also surged from $42,000 on February 25 to $300,000 per day; meanwhile, rates from Australia to Asia have increased to about $255,000 per day.

Fearnleys noted that fears of potential disruptions to Middle Eastern LNG supplies are prompting charterers to lock in capacity quickly.

This sharp rise in LNG freight rates comes as Iran’s war begins to disrupt global LNG trade. Qatar earlier this week halted LNG production and declared force majeure to affected buyers, and due to security concerns, energy transportation through the Strait of Hormuz has essentially come to a halt.

Qatar and the UAE together account for about 20% of global LNG supply, so this supply disruption has an immediate impact on the worldwide natural gas market.

Shipping brokers say that with Qatar halting production and shipping through the Strait of Hormuz severely impeded, traders are preparing for longer routes and tighter capacity. LNG cargoes that previously traveled short distances from the Gulf to Asia may now have to be sourced from the US, Australia, or West Africa, lengthening voyages and increasing demand for LNG carriers.

Asia is expected to be the most affected. About 85% of Qatar’s LNG exports typically go to Asian buyers, with major importers like India, Japan, and South Korea heavily dependent on this supply.

This supply disruption has reshaped the pricing landscape of the LNG market. Earlier this week, spot LNG prices in Asia briefly reached $25.40 per million British thermal units, but after U.S. President Trump announced that the U.S. would provide political risk insurance and naval escort for energy ships passing through the Strait of Hormuz, prices slightly retreated to $23.80.

Even with the decline, current LNG prices are still about double the levels before the conflict escalated and Qatar’s production was halted. As the global LNG market continues to tighten, traders are competing fiercely for both supply and capacity.

(Source: Cailian Press)