Hormuz LNG flows extend rebound, still far below pre-war

More liquefied natural gas tankers are getting out of the Strait of Hormuz. At least three LNG shipments have left the waterway since late last week, according to ship-tracking data compiled by Bloomberg and Kpler, and that extends a recovery that began in September. Even so, flows are still more than 75% below where they were before the Iran conflict began in late February.gcaptain+1

Traders are watching Hormuz traffic for signs that the supply crunch is easing. Last month that crunch pushed LNG prices in Europe and Asia to their highest since late 2022, Bloomberg reported. If the recovery holds, it could bring prices down before the Northern Hemisphere winter, when demand for heating usually climbs.gcaptain

September high, still a fraction of normal

Kpler counted 21 LNG cargoes leaving Hormuz in September. That is the highest monthly total since the war began and up from 15 in June. S&P Global Energy counted 19: 13 from Qatar and six from the United Arab Emirates, Reuters reported. Before the war, about three LNG cargoes left the strait every day. The waterway carried about one-fifth of the world's LNG supply.reuters+1

"LNG transits through the Strait of Hormuz accelerated in the second half of September and if this is maintained into October, we could see full-month transits recover to 25% of pre-war levels," Eric Yep, an analyst at S&P Global Energy, told Reuters. He added that "the key concern is whether LNG transits through Hormuz can be sustained through winter".reuters

Counting cargoes accurately is difficult. Many carriers switch off their tracking transponders while they pass through the strait. Qatar has no other export route, and it shipped only 18 LNG cargoes in the first six months of the war, compared with 509 in the same period a year earlier, according to data provider ICIS.euronews

Attacks on shipping continue

The traffic is picking up while attacks on ships keep happening. On Oct. 4, UK Maritime Trade Operations (UKMTO) said the captain of a tanker reported being hit by an unknown projectile inside the strait. The strike damaged the engine room, the crew was safe and no environmental damage had been reported. A few days earlier, on Oct. 1, another tanker caught fire after a projectile hit it while transiting the strait.iranintl+3

Supply suspensions run into winter

Buyers are still preparing for shortages. Qatar has extended its force majeure on LNG deliveries to Asia and Europe through the end of November. Italy's Edison said it received a QatarEnergy notice extending the suspension into early December. Edison has now missed 35 cargoes since April and has replaced 23 of them, mostly with U.S. gas.oilprice+1

The oil market is in better shape. Separate estimates from JPMorgan Chase ↗ 0.00% and Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.01% show crude flows from the Middle East coming back toward pre-war levels despite the risks to shipping.gcaptain