Asian liquefied natural gas (LNG) prices have surged to their highest levels since March, with spot LNG trading at approximately $20.2 per million British thermal units (MMBtu) after a 10% increase in the past week. This spike is largely attributed to ongoing hostilities between the US and Iran, which have severely disrupted shipping through the Strait of Hormuz, a critical chokepoint for global energy trade. For Asian buyers, who heavily depend on Qatari cargoes, these disruptions have delayed the return of crucial volumes and tightened LNG supplies, with analysts like Evan Tan from ICIS predicting continued high spot prices through the year if geopolitical tensions persist.
The conflict's impact is acutely felt in countries like Bangladesh, where the Iran war has nearly tripled the country's LNG subsidy burden. The original allocation of $600 million for fiscal year 2025-26 has ballooned to $1.66 billion, a 176.7% increase, primarily because major long-term suppliers such as QatarEnergy, Oman's OQ Trading, and US-based Excelerate Energy invoked force majeure clauses in March. This forced Petrobangla, Bangladesh's state-owned oil and gas company, to purchase significantly more expensive LNG from the volatile spot market. For instance, spot purchases were made at prices ranging from $20 to $28 per MMBtu, substantially higher than Bangladesh's long-term contract rates.
Petrobangla's Director (Finance), AKM Mizanur Rahman, stated that the war added $1.06 billion to the subsidy requirement. The company had initially planned for 41 cargoes, with only eight from the spot market, but ended up purchasing 25 spot cargoes, more than three times the planned volume, between March and June. To mitigate rising costs, Petrobangla even cut two planned LNG cargoes from its fiscal import plan, saving over $200 million. Bangladesh currently relies on imported LNG for about 40% of its natural gas supply, and the ongoing disruptions underscore the growing need for secure and affordable energy imports. Petrobangla anticipates potentially needing to procure up to 75 spot market cargoes in the coming year and is actively seeking alternative procurement options through agreements with the US, Australia, Angola, and Mozambique.
