QatarEnergy suspends LNG shipping through Red Sea

Quantum Commodity Intelligence – QatarEnergy looks to have joined the growing list of energy shippers no longer transiting through the Red Sea, with the LNG giant pausing shipments after last week's heightened tensions after US and UK forces launched strikes against Houthi militants.

According to ship-tracking data compiled by Bloomberg, Qatar has halted or re-routed five of its LNG carriers that had been scheduled to transit the Red Sea, with three off the coast of Oman, while one is already in the Red Sea and a fifth just on the Mediterranean side of the Suez canal.  

Late last week the Tradewinds specialist maritime publication reported that only vessels operated or chartered by Russia and Qatar were still shipping LNG through the Red Sea, leaving just Russian shippers still transporting gas through the channel.

Despite the likely delays to Qatari gas bound for Europe, benchmark TTF futures for Feb24 were around 6% lower at around €29.92/MWh late afternoon European time, hovering close to six-month lows as stock levels remain seasonally high.

In Asia, LNG was also close to six-month lows, with JKM spot prices trading below $11/mmBtu for February delivery, while the equivalent European cargo price was under $10/mmBtu.

Historically nearly all of Qatar's LNG was shipped to Asia customers, but European buying has ramped up since 2022 in a bid to replace Russian pipeline gas.

Qatar exported over 75 million/metric tons (LNG in 2023, including around 14  million mt to Europe, primarily through the Red Sea, although this figure was still dwarfed by more than 56 million/mt shipped to Asia.

Qatari vessels, which make up most of Suez LNG traffic, are now likely to have to transit around southern Africa's Cape of Good Hope, adding significant time and costs.

The US Energy Information Administration (EIA) last month said the Red Sea plays host to around 8% of global LNG shipments, although flows have eased from the peaks after Russian volumes from Asia were re-routed from Western destinations.