Laden liquified natural gas (LNG) transits from the Persian Gulf dropped sharply over the past week after the attack on a QatarEnergy vessel, a leading agency said in a new analysis, suggesting that exports are facing renewed shipping constraints even though regional loadings remain resilient.
Renewed escalation in the U.S.-Iran conflict is sharply reducing LNG exports from the Persian Gulf, reversing the brief recovery that followed the June 17 agreement intended to facilitate commercial transit through the Strait of Hormuz, according to new analysis from S&P Global Energy.
Vessel tracking data from S&P Global Energy shows that the combined 10-day moving average of laden LNG transits through the strait fell from roughly 0.8 cargoes per day in late June to just 0.2 cargoes per day by July 15, it said.
Only one LNG cargo is known to have exited the Persian Gulf in the past week, reflecting mounting caution among shipowners after the July 7 attack on QatarEnergy LNG’s Al Rekayyat, the first direct strike on an LNG vessel since the conflict began, the S&P Global Energy said.
“LNG traffic through the Strait of Hormuz has fallen back to levels last seen in early June, well before the June agreement created a temporary window for renewed movement,” said Mehrun Etebari, an analyst at S&P Global Energy.
“Our outlook increasingly points to shipping constraints, rather than the ramp-up of liquefaction capacity, as the main factor limiting exports.”
However, the slowdown in exports stands in sharp contrast to activity at liquefaction plants, according to the S&P.
LNG production and vessel loadings at QatarEnergy LNG and the UAE’s ADNOC LNG are said to have continued at a relatively robust pace despite the disruption to outbound shipping. This has resulted in a growing inventory of LNG aboard tankers waiting inside the Persian Gulf.
Seven laden Qatari LNG carriers alone were estimated to be holding around 0.57 million metric tons of LNG as of mid-July, while S&P Global estimates that nearly 1.9 million metric tons of LNG tanker capacity is currently positioned inside the Persian Gulf, which marks the equivalent of around 8 days’ worth of typical pre-war peak exports from the two projects.
Should the effective blockage of the Strait of Hormuz ease in the coming weeks, these vessels could enable a relatively rapid increase in exports, releasing LNG that has already been produced and loaded, it noted.
The analysis, however, also notes that intermittent disruptions are likely to continue while security risks remain elevated, but a reopening of transit routes could unlock substantial export volumes already waiting within the Gulf and materially improve the outlook for global LNG supply.
