This sharp rise is largely driven by an almost 30% increase in the front-month Dutch TTF Natural Gas contract, a key benchmark for European gas prices. The benchmark now stands at nearly double its pre-war level.

“European natural gas rose sharply, as supply risks rose after Iran attacked the United Arab Emirates, Saudi Arabia and Kuwait after its security chief, Ali Larijani was killed in a strike. Israel airstrikes hit Iran’s South Pars natural gas field, impacting power generation,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

The latest price surge follows Iran’s aerial attacks since Wednesday, which struck Qatar’s Ras Laffan LNG facility as part of a broader campaign targeting energy infrastructure in the UAE and Saudi Arabia. These attacks came in response to Israeli strikes on Iran’s South Pars gas field, according to media reports.

“Qatar exports… LNG from the site, accounting for nearly 20% of global LNG trade,” two analysts from ING Bank said.

In fact, “the significance of North Field/South Pars cannot be overstated: the world’s largest gas field holds around 50 trillion cbm of gas, equating to over 85 times the annual global LNG trade,” said Greg Molnár, gas analyst at the International Energy Agency.

Asia follows

Amid these developments, Singapore LNG prices have jumped by $208/mt since Monday, tracking the NYMEX Japan/Korea Marker (JKM), which rose by around 25%. The front-month contract now stands at $20.18/MMBtu, equivalent to $1,049/mt.

The road ahead: from disruption to damage

“While shipments from the plant had already been halted earlier this month due to the war, the latest strikes threaten to keep gas prices in Europe and Asia higher for longer,” said Stephen Stapczynski, Energy Asia team leader at Bloomberg News.

Market participants increasingly expect LNG prices to remain elevated. For the past three weeks, the Hormuz crisis was seen as a “shipping disruption.” This week, it has evolved into “an infrastructure story.” Earlier assumptions held that “when the conflict ends, production restarts.” But physical damage changes that outlook. Damaged infrastructure requires repairs before operations can resume, explained Hendrian Sukardi, LNG market analyst at ENN Energy.

“Damage to the LNG facilities means that the troubles for global gas markets aren’t just about when flows through the Strait of Hormuz resume, but how long repair work at the sites might take. Even if it turns out that the LNG facilities are largely untouched, the market will have to price in a higher risk premium, given the growing threat to energy infrastructure in the region,” ING Bank analysts added.

Bunker fuel prices rally

Conventional bunker fuel prices have also surged sharply, driven by escalating Middle East tensions. These tensions have pushed Brent crude prices higher and disrupted trade flows through the Strait of Hormuz, a critical artery for global oil shipments.

At two major global bunker hubs—Singapore and Rotterdam—VLSFO prices have nearly doubled since the start of March, rising by $634/mt and $399/mt to approximately $1,154/mt and $881/mt, respectively.
Source: By Tuhin Roy, ENGINE, https://www.engine.online/news