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Gas Prices Rise On Iranian Actions

LNG

European LNG prices rose again on Monday by 2.2% to EUR 31.40, close to the intraday high of EUR 31.58. They are now up almost 15% in April. The market rose following Iran’s drone/missile attack on Israel over the weekend and its capture of an Israeli ship in the Strait of Hormuz. Qatar is just inside the Strait and is one of the world’s main LNG exporters. In response to threats to shipping in the area, spot cargoes have been promptly acquired, according to ANZ.

  • Despite significant pressure for restraint, Israel has apparently decided on a “forceful” response but in a way that won’t escalate tensions in the region. With Iran promising to retaliate “within seconds” though, the risks are still very elevated and energy markets wary.
  • European markets remain susceptible to supply disruptions with maintenance currently in Norway, risks to Ukrainian gas storage and current problems at the Freeport LNG facility in the US, where all three production lines are down, supporting prices. But storage remains at seasonal highs and so risks to supply remain fairly low.
  • Industrial demand in Europe has been weak and while euro area IP rose 0.8% m/m in February it is still down 6.4% y/y.
  • Forecasts for warmer weather in the south and east of the US in the second half of April weighed on US natural gas prices. They fell almost 5% on Monday to be down 4.5% this month.
  • North Asian prices rose 1.5% to be up 13.2% in April. Asia and Europe now compete for global supplies, as the latter has moved away from Russian sources.
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European LNG prices rose again on Monday by 2.2% to EUR 31.40, close to the intraday high of EUR 31.58. They are now up almost 15% in April. The market rose following Iran’s drone/missile attack on Israel over the weekend and its capture of an Israeli ship in the Strait of Hormuz. Qatar is just inside the Strait and is one of the world’s main LNG exporters. In response to threats to shipping in the area, spot cargoes have been promptly acquired, according to ANZ.

  • Despite significant pressure for restraint, Israel has apparently decided on a “forceful” response but in a way that won’t escalate tensions in the region. With Iran promising to retaliate “within seconds” though, the risks are still very elevated and energy markets wary.
  • European markets remain susceptible to supply disruptions with maintenance currently in Norway, risks to Ukrainian gas storage and current problems at the Freeport LNG facility in the US, where all three production lines are down, supporting prices. But storage remains at seasonal highs and so risks to supply remain fairly low.
  • Industrial demand in Europe has been weak and while euro area IP rose 0.8% m/m in February it is still down 6.4% y/y.
  • Forecasts for warmer weather in the south and east of the US in the second half of April weighed on US natural gas prices. They fell almost 5% on Monday to be down 4.5% this month.
  • North Asian prices rose 1.5% to be up 13.2% in April. Asia and Europe now compete for global supplies, as the latter has moved away from Russian sources.