Middle East tensions escalate, Asian LNG spot prices rise to the highest level since December 2022

Tensions in the Middle East have surged again, with spot prices for liquefied natural gas in Asia soaring to their highest level in over three years as risks of supply disruption through the Strait of Hormuz spark widespread market concerns.

According to traders, Asian LNG spot prices rose Wednesday night to $25.908 per million British thermal units, the highest level since December 2022. The week's cumulative increase exceeds 5%, and the price has more than doubled compared to levels before the conflict erupted. According to CCTV News, Trump stated that military strikes against Iran may be brief, but also warned, "We are ready to strike again at any time."

The rapid price surge is affecting Asian consumers. Pakistan canceled an emergency procurement tender due to excessively high bids, and its power shortages have continued to worsen.

Hostilities between the United States and Iran have reignited, ending several weeks of relative calm in the Middle East and directly fueling the latest LNG price increase.

Trump said that the latest strikes against Iran may not last long, but his remarks left room for a hardline stance. This has kept market expectations of further escalation alive and continues to pose a threat to energy supplies passing through the Strait of Hormuz.

According to Bloomberg, before the conflict broke out, about one-fifth of global LNG supplies were transported via the Strait of Hormuz. Should this strategic waterway be disrupted, the impact on global natural gas trade would be hard to measure.

This round of increases has already had a marked impact on energy budgets for some Asian economies. LNG spot prices have more than doubled from pre-war levels, causing countries and companies dependent on spot procurement to face surging cost pressures.

According to Bloomberg, Pakistan faces a severe situation. The country was forced to cancel an emergency LNG procurement tender because the bids it received were too expensive, leading to further worsening of power shortages.

The impact of rising energy prices is gradually being passed on to end-users. Analysts note that higher LNG prices could drive up consumer utility bills even further, while countries are already grappling with energy pressure from simultaneous supply shocks caused by Middle East conflicts and the Russia-Ukraine war.

According to Bloomberg, for emerging Asian economies with limited fiscal room and high external energy dependence, persistently rising LNG costs not only affect people's livelihoods but also pose potential risks to macroeconomic stability.