Israel’s strike on Iran sparks LNG supply concerns in Asia: report

The Israeli strike on Iranian nuclear facilities has intensified concerns in Asia's LNG market, with trading companies, importers, and governments reviewing supply risks amid rising regional tensions, sources told Platts, part of S&P Global Commodity Insights, according to a recent report by S&P Global.

The airstrike, described as "pre-emptive," came just as the summer season began in Asian countries, when gas consumption for power generation peaks.

Asia is highly exposed to LNG exports from the Middle East, accounting for nearly 88 per cent of the region's shipments, said Eric Yep, principal analyst at Commodity Insights.

"Importers are in discussions with their suppliers and portfolio players to explore contingency plans in case supply routes are impacted," Yep told S&P Global Commodity Insights.

While there have been no immediate supply disruptions, industry insiders warn that continued escalation could affect key transit points such as the Strait of Hormuz. The waterway, which handles nearly 11 billion cubic feet per day of LNG and around 20 million barrels of seaborne crude oil, is crucial to regional energy flows, the report said.

Asian spot LNG prices jumped following the Israeli assault. Platts assessed the July Japan-Korea Marker (JKM), the benchmark for LNG delivered to Northeast Asia, at $13.44 per MMBtu on June 13, up 5.38 per cent from the previous day.

Shipping firms are also taking precautionary measures. Japan's Mitsui OSK Lines has issued safety alerts for its vessels in the Persian Gulf, while chartering offers are being paused.

"There are no fresh offers today," said one chartering executive, citing heightened risk.

South Korea's energy ministry held an emergency meeting with LNG importers and said it was ready to act to minimise any disruptions. China, which now sources a third of its LNG imports from Qatar, is particularly vulnerable due to its ongoing halt of US LNG imports.