Red Sea Tanker Disruptions: Impacts on LNG Shipping

Summary

The ongoing closure of the Red Sea to tankers carrying liquefied natural gas (LNG) is having a significant impact on global LNG trade flows. The disruption is effectively curtailing LNG shipping capacity, leading buyers to support further US LNG expansion.

Impact on LNG Shipping

The closure of the Red Sea has forced LNG tankers to take longer routes, effectively reducing the number of available vessels. This has led to a sharp increase in LNG shipping rates.

According to estimates by shipbrokers Poten & Partners, the cost of shipping LNG from the Middle East to Europe has increased by over 50% since the closure of the Red Sea. The disruption is also impacting LNG trade between the United States and Asia.

Impacts on Global LNG Trade Flows

The disruption to LNG shipping via the Red Sea has led to a significant decrease in clean tanker transits through the strait. This has resulted in a notable shift in global LNG trade flows.

LNG exports from the Middle East to Europe have declined, while exports from the United States to Europe have increased. The disruption is also expected to lead to an increase in LNG imports into Asia from the United States.

Outlook

The impact of the Red Sea tanker disruptions on LNG shipping and global LNG trade flows is expected to continue in the near term. The current instability along the Red Sea shipping lanes is driving buyers to support further US LNG expansion.

However, the long-term impact of the disruption is uncertain. If the Red Sea remains closed for an extended period of time, it could lead to a significant shift in global LNG trade patterns.