LNG prices stay elevated despite Iran deal and oil recovery

LNG prices stay elevated despite Iran deal and oil recovery
LNG prices stay elevated despite Iran deal and oil recovery

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More than a week after the United States and Iran signed a memorandum of understanding to end their war and reopen the Strait of Hormuz, global LNG prices remain stubbornly high as shipping bottlenecks, a deadly explosion in Qatar, and summer demand conspire to keep supply constrained.

Oil Flows Resume, but LNG Lags Behind

While crude oil tankers have begun transiting the Strait of Hormuz in growing numbers — with U.S. Energy Secretary Chris Wright reporting roughly 20 million barrels of crude passing through in a single 24-hour period this week — the LNG market has been slower to normalize. According to maritime intelligence firm Kpler, 284 ships have crossed the strait since the framework agreement took effect on June 17, though that remains well below the pre-conflict average of approximately 138 daily crossings. reuters.com bbc.com

Brent crude has fallen below $73 a barrel, its lowest level since before the war began on February 28, dropping nearly 40% from wartime highs near $118. Yet Asian LNG spot prices, as measured by the JKM benchmark, traded at $15.39/MMBtu on June 25 — still elevated compared to levels seen before the conflict disrupted Qatari exports that accounted for nearly a fifth of global supply. bbc.com straitstimes.com euronews.com tradingeconomics.com

Shipping Caution and Qatar's Setback

The disconnect between oil and gas recovery stems from two factors. First, tanker operators remain wary. Shipping association BIMCO still considers Hormuz transit “highly risky,” with mines a key concern. Insurance premiums for strait transit have surged from roughly 0.25% of hull value pre-war to nearly 5%, according to industry sources. ICIS global oil market leader David Jorbenaze said returning to full pre-conflict volumes is “realistically a 2027 story.” reuters.com claimsjournal.com aljazeera.com

Second, an explosion on June 21 at the Barzan gas facility inside Qatar’s Ras Laffan complex killed 13 workers and injured 66 during the restart of operations that had been halted since December 2025. Qatar’s Energy Minister Saad al-Kaabi insisted the blast would not affect LNG exports, and QatarEnergy said its main LNG facilities remained unaffected. But the incident underscores the fragility of a supply chain still recovering from months of disruption. facebook.com reuters.com aljazeera.com bbc.com

Iran's Toll Ambitions and the Path Ahead

As oil prices deflate, Iran is pursuing a new revenue stream. According to The Wall Street Journal, Tehran estimates that imposing fees for “security, safety, and environmental services” in the strait could yield $40 billion annually for participating nations. U.S. Secretary of State Marco Rubio has rejected the idea, calling it a breach of international law. wsj.com reuters.com rawstory.com

Qatar’s Prime Minister told the Financial Times on June 24 that the country plans to restart full LNG production “within a few weeks”, with QatarEnergy previously telling buyers it could reach 50% capacity within a month and 80% within two months of safe passage being restored. Until shipping confidence returns and damaged infrastructure is fully repaired, however, LNG buyers face a tighter market heading into peak summer demand. reuters.com straitstimes.com

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