Asian LNG spot prices have surged to their highest level since 2022, climbing 5% in a single week as heightened US-Iran tensions and an extended force majeure declaration from Qatar's state energy firm cripple supply expectations. The regional benchmark closed Wednesday at $25.908 per million British thermal units, approaching the psychologically significant $26 mark for the first time in three years.

The latest escalation follows former President Trump's announcement that US forces had destroyed newly constructed Iranian facilities along the Strait of Hormuz, with a stark warning that Washington stands ready to launch further strikes. This aggressive rhetoric has compounded fears over the security of Persian Gulf shipping lanes, pushing spot prices sharply higher.

Compounding the geopolitical risk, QatarEnergy has extended its force majeure clause on LNG deliveries through November, effectively dashing any near-term hopes of normalizing Gulf export flows. The combined impact sent both Asian and European gas benchmarks noticeably higher over the past weekend, with no immediate resolution in sight.

Given that the resumption of regular LNG shipments from the Gulf remains a distant prospect—coupled with recovering seasonal demand—analysts see further upside pressure on prices. The current environment is likely to strain buyers' budgets, with some marginal purchasers potentially forced out of the spot market altogether.

South Asian buyers scramble for cargoes to replace Qatari term supplies

The primary driver of Asia's price rally originates from South Asia. According to reports, Pakistan and Bangladesh are actively seeking spot LNG cargoes to offset the loss of long-term contract volumes from Qatar, which remain trapped behind the Strait of Hormuz blockade.

Tender documents show that utility companies from South Korea, India, Taiwan, and Bangladesh are all in the market for spot shipments delivering between October and November, reflecting concentrated and urgent procurement demand that is fueling the price surge.

However, not all buyers can stomach current price levels. Pakistan's state-owned gas trading company walked away from its latest spot tender earlier this week after rejecting a bid from BP priced above $27 per MMBtu, deeming the offer prohibitively expensive and ultimately abandoning the purchase.

Asia is far from the only market feeling the strain. European natural gas prices have also climbed in tandem, with Wednesday's futures settlement reaching levels not seen since 2023. This adds significant cost pressure on European utilities as they race to fill storage caverns before the onset of winter, making the pre-stocking season notably more expensive and challenging.

The synchronized price surge across both continental markets underscores the systemic shock that the Middle East crisis has delivered to the global LNG trade. With Qatar's force majeure persisting and the Strait of Hormuz passage remaining blocked, the tightness in global spot LNG supply shows no signs of abating in the near term, leaving the market vulnerable to further price spikes.